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FSC takes action in Asia Plastic case
Taiwan News, Staff Writer
2014-05-05 03:27 PM
A major breakthrough has occurred in the Asia Plastic Recycling Holding Limited (1337) case. In order to counterattack what many see as foreign vulture capitalism, Financial Supervisory Commission Chairman Tseng Ming-chung stated that a lawsuit will be filed overseas against the foreign investment institution Glaucus for issuing a report to short sell Asia Plastic.

The FSC filed a suit against U.S. research institute Glaucus Monday based on suspected violation of Article 155 of the Securities and Exchange Act which was transferred to prosecutors for investigation. This marks the first time in Taiwan securities history that the FSC has sought prosecution of a foreign research institution. The FSC will also review and strengthen market supervision of foreign issuer stocks in four areas.

After Taiwan Stock Exchange representatives found no abnormalities in China regarding the five major financial doubts raised by Glaucus regarding Asia Plastic, the FSC took two actions Monday to declare war on potential vulture capitalists. Officials state, the company will be sued first, in principle, and if the research report possess individual authors, they will be included in the lawsuit. The FSC’s Securities and Futures Bureau is currently collecting and preparing information pertinent to the investigation.

Officials remarked, Glaucus is an offshore company but issuing reports domestically constitutes an intra-territorial action which falls under the jurisdiction of the Securities and Exchange Act. Suing Glaucus for violation of the Securities and Exchange Act will be a deterrent to potential foreign vulture capitalists.

Financial Supervisory Commission Chairman Tseng Ming-chung stated in the Legislative Yuan last week that, if foreign research institutes issue false information, the FSC will seek prosecution according to Article 155 of the Securities and Exchange Act. According to regulations stipulated by Article 155 of the Securities and Exchange Act, actions such as the spread rumors or false information for the intention of influencing the trading price of securities on the centralized trading market are prohibited.

In addition to the actions taken regarding the Asia Plastic case, the FSC will also review and strengthen market supervision of foreign issuer stocks in four areas including deliberating the increase of foreign issuer stock’s information transparency, discussing the enhancement of financial report auditing, and strengthening claims protecting investors.

In addition, FSC officials indicated on Sunday that the audit of Asia Plastic’s financial report did not employ the cross-strait securities supervision cooperative platform mechanism because Asia Plastic is not a listed company in the mainland. However, since Taiwan and China have signed a memorandum of understanding regarding supervisory cooperation, future information exchange and assistance involving securities supervision can employ this mechanism.

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