Taoyuan District Court yesterday ordered the detention of a high level BenQ Corp (明基) executive suspected of involvement in an alleged insider trading scandal, after prosecutors raided the company's headquarters in Neihu and its factory in Taoyuan on Tuesday afternoon.
Company spokesman and senior financial executive Eric Yu (游克用) was detained, Taoyuan District Prosecutors' Office spokesman John Chang (張進豐) told reporters yesterday.
Yu could be detained for up to four months before being charged, in accordance with the legal system.
In addition, two other BenQ officials were questioned by prosecutors on Tuesday night about their suspected involvement in the scandal. After questioning, former chief financial officer Alex Liou (
In the wake of the corporate investigation, stock prices of BenQ fell by 6.7 percent to NT$13.05 early yesterday, nearly reaching the daily limit, as jittery investors rushed to sell BenQ shares.
That brought the decline of BenQ shares to a range of 25 percent since the beginning of the year, according to Taiwan Stock Exchange's statistics.
The three employees questioned are suspected of trading between 6 million and 7 million BenQ shares before the company released its fourth-quarter earnings report for 2005 last March.
Chang said on Tuesday that prosecutors received documents from the Financial Supervisory Commission last December alleging that the company was involved in insider trading.
He said the three used their knowledge of the earnings report -- which made public a loss of NT$6 billion -- to trade between 6 million and 7 million BenQ shares before the report's release.
BenQ chairman Lee Kun-yao (
In its filing with the stock exchange yesterday, BenQ said it had selected chief financial officer David Wang (王淡如) to replace Yu as company spokesman.
Because Yu played a key role in steering BenQ's financial operations, his detention has triggered concerns over whether operations would be impacted.
To ease such worries, BenQ said in an internal e-mail that the company's operations would not be significantly affected by the probe.
BenQ's NT$350 million 2.35 percent bonds due in 2009 traded at 62 basis points above the government securities on Tuesday, up from 60 basis points on March 12, Bloomberg data showed.
"The sentiment will remain very negative in the short term" for BenQ while the investigation is ongoing, said Laura Chen, an analyst at Nomura Holding Inc in Taipei.
Rating agency Taiwan Rating Corp (
Additional reporting by Bloomberg
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