A People First Party legislator says he's aware of 76 cases in which investors were cheated by brokers who claimed to be selling subscription rights to fixed-line telecom companies.
According to Chen Chao-jung (陳朝容), the investors thought they were buying rights to purchase shares in the telecom firms, which do not yet trade on the nation's two exchanges, the Taiwan Stock Exchange and the TAISDAQ.
The brokers purported to offer investors the right to buy shares at NT$10 to NT$20 a piece in advance of any public offering by the telecom companies.
"We've discovered that a considerable number of the subscription rights are bogus," Chen said.
Chen set up a center to take complaints from investors on Thursday, and thus far 76 instances of fraud have been reported to him.
In one of the cases, a group of 47 investors were cheated out of as much as NT$5 million, Chen said.
Yang Sheng-feng (
Yang said Chou approached him in January with information on subscribing to 1,000 shares in the Taiwan Fixed Network Telecom (
"Because the fixed-line industry seemed to be rather promising, I believed what he said," Yang said, adding that Chou claimed to be a representative of the telecom firm.
Yang later passed the information to friends, relatives and clients, eventually organizing a group of 47 investors. The group put up NT$5.25 million for the right to buy 350,000 shares in Taiwan Fixed Network Telecom.
Yang said Chou drew up contracts with the investors, promising that the rights certificates could be exchanged for shares once the telecom firm was public.
But when Chou was arrested in June, Yang realized he had been cheated.
Chen Ching-shun (
The investigator said that the sale of subscription rights usually doesn't involve brokers as middlemen, and certificates are not normally traded between private individuals. Individuals who purchase the certificates are also violating the law.
Brokers caught selling bogus securities could be brought up on fraud and forgery charges.
The trading of subscription rights for fixed-line telecom firms has raised eyebrows in the Legislative Yuan recently, following reports that several lawmakers have done a big business trading the certificates.
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