The Financial Supervisory Com-mission said yesterday that it will investigate whether United Microelectronics Corp (UMC,
"The Taiwan Stock Exchange (TSE) has found that, after receiving the US Securities and Exchange Commission's letter [on Sept. 26], some of [UMC's] management sold the company's shares at a `sensitive' time, which was inconsistent with the company's statement," the commission spokesman Lin Chung-cheng (
"We will find out if there was any insider trading involved," Lin said.
Lin pointed to a steep rise in UMC share prices between late September and early October in a graphic handed out to reporters.
The commission, however, was mum on details about the UMC officials who sold shares, how many they sold, and whether or when the investigation will be turned over to prosecutors, citing confidentially during the ongoing probe.
public letter
The financial watchdog made the remarks after UMC, the world's second largest made-to-order chipmaker, released a public letter yesterday to protest a fine it received for a late disclosure. In the letter, UMC explained that its late disclosure was a result of the US regulator's demand for the company to revise its financial statements.
UMC said on Dec. 14 that the firm's losses last year under US accounting standards were three times more than originally reported. It revised its shortfall to NT$14.2 billion from NT$4.7 billion because of erroneous assessments of charges, goodwill, share bonuses and derivatives. UMC's results for last year under Taiwanese standards -- showing a profit of NT$32 billion -- will remain intact, the chipmaker said.
The announcement was first made in the US, where the company's American Depositary Receipts trade, at around 5.30am local time. The company did not make a similar filing until five hours later -- about 10:30am local time -- at the demand of the TSE. The exchange fined UMC NT$50,000 for that late disclosure.
Protesting that fine, UMC said in yesterday's letter that the revision did not impact on the chipmaker's financial results under Taiwan's standards and therefore was not relevant to local investors.
This was the company's fourth advertisement voicing protest against the authority's punishment. UMC is currently under investigation for alleged illegal investments in China.
The SEC's letter, dated Sept. 23, did not explicitly ask UMC to revise its financial statements and therefore the company did not feel obligated to report to local financial regulators, UMC said.
Describing itself as a simple, self-disciplined and law-abiding firm, whose management is banned from trading shares, the company said in the letter that, "if Taiwan has become a country of disorder" that maybe "we should delist from Taiwan and move to other decent markets."
rebuttal
The commission refuted the chipmaker's claims, saying that there were close ties between the US and Taiwan markets and that the company's late disclosure, which led to a dip of UMC's share price by NT$1 within minutes, demonstrated that local investors agreed.
Moreover, the SEC letter dated Sept 23 stated that "you should revise your documents in future filings in response to this comment" and UMC's audit committee viewed the large revision as significant information, which both contradict the company's statements, the commission said.
A lack of simultaneous and fair disclosure in Taiwan following the US disclosure "is discriminatory toward local investors," Lin said.
The Taiwan Stock Exchange said yesterday that UMC's move will affect shareholders' views of the firms' credibility, and that this will be reflected in its share price.
"It is UMC chairman Robert Tsao's (
In the letter, UMC said that since it had uploaded the disclosure on Business Wire -- a US Web site disseminating full-text announcements from companies and organizations worldwide -- it had effectively spread the same information simultaneously to the TSE as well as local media.
But Wu said that this does not mean that UMC sent its message "in parallel" to Taiwanese shareholders, especially to those who do not understand English.
Wu said that listed companies should not be lax as self-regulation is of paramount importance.
"TSE will apply the same standards to all listed companies, which is the same as what overseas regulators do. Stricter regulation is a global trend," Wu said.
future demand
The financial authorities are planning to demand in the future that locally-listed companies that are also publicly traded in foreign markets should simultaneously report to the nation's regulators when they make crucial announcements to foreign market regulators said Wu Tang-chieh (
Earlier yesterday, the nation's lawmakers unanimously voiced their support of the commission taking a "tough" stance on UMC's public statement. They said that the chipmaker's neglect of the rights and interests of domestic investors and its disrespect for local financial regulators was unacceptable.
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