Prosecutors question Lite-On founder on insider trading allegations

Taipei-Taipei prosecutors on Monday questioned Lite-On Technology Corp. founder Soong Kung-yuan (???) and seven other people as part of an insider trading investigation in connection to a merger deal Soong helped broker in 2019.

Prosecutors with the Taipei District Prosecutors Office and investigators with the Ministry of Justice's Investigations Bureau also raided Soong's office at Lite-On Technology's Neihu headquarters and a dozen other locations, looking for evidence in the case.

Prosecutors suspect that Soong joined with others in buying a large number of Lite-On Semiconductor Corp. (????, LSC) shares before it was publicly known that the company, a Lite-On Technology subsidiary that he chaired at the time, would be sold to U.S.-based Diodes Inc.

According to prosecutors, Diodes first made public its intention to buy LSC on Aug. 9, 2019, when it announced it would purchase all of LSC's shares.

In the next three days of trading on Aug. 12, 13 and 14, the stock rose 26.5 percent from NT$32.10 to NT$40.60, a surge that was not surprising considering Diodes' offer price of about NT$42.5 per share, Taiwan Stock Exchange (TWSE) data shows.

The stock pretty much ranged between NT$39 and NT$42 from that point on until the sale was finally completed at the end of November 2020.

Knowing that his company would be sold to Diodes, Soong joined with his close friend, the owner of SF Co., Ltd. surnamed Shan (?), to buy in 10.16 million LSC shares in July 2019 when the closing price of the stock ranged between NT$31.30 and NT$35.10, prosecutors alleged.

TWSE records show that after having hovered at around NT$30 for much of June, the stock suddenly attracted heavy buying interest early in July, when the price was bid up from NT$31.30 to NT$35.10 between July 1 and July 4.

Prosecutors believe that Soong and Shan sold their shares in October and November 2020 just before the deal was closed when the stock was trading at around NT$42 a share, netting an illicit profit of NT$60 million (US$2.11 million)

Soong also shared the insider information to a number of his close friends and relatives, allowing them to buy LSC shares before the deal was announced publicly and then selling them for a profit before the completion of the merger, prosecutors suspect.

Each of them earned a profit of between hundreds and millions of Taiwan dollars, according to prosecutors.

Prosecutors on Monday evening raided several locations and summoned Soong, Shan and six other suspects and a number of witnesses for questioning to determine if they were involved in insider trading.

Lite-On Technology, a major manufacturer of light-emitting diodes and computer peripherals, confirmed in a statement that it was searched by prosecutors and investigators on Monday, but stressed that they only searched Soong's office and not other parts of the company.

The investigation was in connection to the personal stock purchases of Soong and was not directed at the company, and it therefore will not affect the company's finances and operations, the company said in the statement.

Soong is the founder of Lite-On Technology but retired as the company's chairman in July 2020. (Lin Chang-shun, Han Ting-ting and Joseph Yeh)

Source: Focus Taiwan News Channel