Taipei prosecutors indicted a KMT legislator for stock manipulation yesterday -- the first time a government lawmaker has been targeted for prosecution since the DPP came to power in May.
Prosecutors say You Hwai-yin (
You is alleged to have used the Diamond Fund (
You faces up to three years and eight months in prison if found guilty.
Prosecutors also named as defendants high-ranking executives at Shang Fong.
These include Chen Shu-lih (
You and the Shang Fong executives agreed to purchase 10 million shares of the company and hold the stock for a one- to two-year period, prosecutors allege.
In return, Chen agreed to pay You NT$10 per share, or NT$100 million, in compensation.
You then instructed the Diamond Fund's manager to buy Shang Fong beginning April 1993; the fund eventually accumulated a total of 8,291,000 shares.
In the meantime, however, Chen and other executives sold off their holdings through dummy accounts while the shares rallied.
But because You did not purchase 10 million shares as promised, Chen refused to pay the NT$100 million. Instead, Chen paid just NT$40 million.
Not content with the deal, You began to unload his company's holdings in Shang Fong, causing its stock price to plummet.
The sell-off also hurt the net asset value of the Diamond Fund, which in turn left some of its investors with losses.
"As a legislator and a member of the Legislative Yuan's Finance Committee, You was supposed to have assisted the government in improving the capital market," said Juang Jeng (莊正), the prosecutor in the case.
"However, You has been profiting for his personal interest and colluded with major shareholders in a listed company, by using money entrusted by the general public in a closed-end mutual fund," Juang said.
"You has neglected the public's interest. The Prosecutors' Office therefore requests the court to sentence him to three years and eight months."
The other defendants were prosecuted earlier in separate cases. Market watchers said You has been known as a stock market manipulator for years.
But while the KMT was in power, prosecutors and courts were been unable to pursue a case against him, especially after You was elected as a legislator, they said.
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