The Financial Supervisory Commission (FSC) has asked the Taiwan Stock Exchange (TWSE) to determine whether Pharmally International Holding Co (康友製藥) forged financial statements and if accounting company Deloitte & Touche Taiwan (勤業眾信) was responsible for the alleged malpractice, FSC Chairman Thomas Huang (黃天牧) said yesterday.
The Taipei District Prosecutors’ Office on Monday questioned two Deloitte & Touche Taiwan accountants over possible breaches of the Securities and Exchange Act (證券交易法).
Prosecutors issued an arrest warrant for Pharmally International chairman Tony Huang (黃文烈) — who has not been seen since early this month, according to company vice president Lu Hsiang-tai (呂祥泰) — for possible breaches of the act, Chinese-language media reported.
Prosecutors accused Huang of using equipment from Pharmally International’s Chinese subsidiary as collateral for a personal loan of NT$700 million (US$23.72 million) and that the firm since 2018 has forged financial statements to hide the fact that the subsidiary was in the red, media reports said.
Based on company filings with the Taiwan Stock Exchange, Pharmally International’s top executives, including its chief financial officer, spokesman and head of internal control, resigned this month, which caused investors to worry, reports said.
The TWSE has collaborated with accounting firms to scrutinize the financial reports and to see whether Deloitte & Touche Taiwan’s accountants failed in their audits, Huang told reporters on the sidelines of a public function in New Taipei City.
If it is certain that the accountants were responsible for the failure, the commission would consider transferring the case to its disciplinary committee, Huang said.
The TWSE on Tuesday suspended transactions of Pharmally International shares, as the company did not submit a financial statement for the second quarter, the exchange said.
Last week, the exchange changed Pharmally International’s stock classification to “full delivery,” as the company could not clearly explain why equipment from its subsidiary was used as collateral.
As the company’s stock is a primary listed security held by a foreign company, investors have voiced concern in the past few days.
“To bolster investors’ confidence and strengthen supervision efficiency, the TWSE will not only adopt more supervisory measures for the primary listed foreign companies, but would also invite underwriters and certified public accountants to discuss how to improve the supervision mechanism,” the TWSE said in a statement.
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