Bill passed to sus­pend stock trad­ing for food scan­dal sus­pects

The China Post - - LOCAL -

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.

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