Bill passed to suspend stock trading for food scandal suspects
The Legislative Yuan approved an amendment to the Securities and Exchange Act Monday to allow the securities authorities to order suspension of trading of a stock involved in food scandals.
In the newly passed rules under the Securities and Exchange Act, securities authorities will also be allowed to order suspension of trading of a stock that is involved in any hazard that undermines public safety, such as pollution.
Currently, the securities regulations stipulate that authorities are authorized to issue an order to require suspension of a stock after taking into account a wide range of issues that could hurt market sentiment and could be likely to send the stock’s price into a tailspin.
Under the current securities trading law, a listed company could face trading suspension if it is faced with legal action, is planning to announce a material transaction agreement soon, is involved in any fraudulent conduct or its stock price appears very volatile.
The bill to amend the securities law was submitted after the public strongly urged the government to protect investors when food scandals or environmental hazards surface that could trigger heavy selling in related stocks.
In the fourth quarter of last year, a series of food scandals emerged, dealing a blow to consumer confidence. Among the food makers involved in the scandals, Wei Chuan Foods Corp., a subsidiary of conglomerate Ting Hsin International Group, suffered a dive in its share price on the local main board.
In late 2013, integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc. (ASE) was caught when its K7 plant located in Kaohsiung discharged untreated waste water into a river used for farm irrigation.
ASE was ordered to partially shut down its K7 plant, which caused a plunge in the IC firm’s share price in the Taiwan Stock Exchange.
Market analysts said that these incidents related to food security and environmental protection have caused heavy losses for investors, prompting calls for the government to tighten monitoring of stock trading.