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September 26, 2017

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FSC says Chang health rumors 'manipulation'

The Financial Supervisory Commission (FSC, 金管會) yesterday reiterated its pledge to investigate rumors of TSMC Chairman Morris Chang's ailing health to law makers, which has spurred a 2.88 percent decline in the company's share price since last Thursday.

The FSC has since stated that the rumor-mongering is suspected to be the work of market vultures, who may have been employing unscrupulous market manipulation. Market commentators suspect that certain traders may have hoped to reap profits by placing short sell orders on TSMC shares ahead of the rumors' release.

TSMC Down Almost 3 Percent On Day Of Rumors' Surfacing

Since Jan 9, TSMC shares have tumbled from NT$104 to NT$101. During the period, trading volume of TSMC shares observed to be expanding, while no significant irregularities relating to the company were found in the futures market, the regulator said. The movement of TSMC's share price, while anomalous, is deemed a tiered decline, as opposed to the more severe sudden crash, said the FSC. Investigators are still scouring over trading records of individual and institutional investors foreign and domestic in an attempt to determine wrongdoing and manipulation, said the FSC.

At the end of trading on Jan. 8, TSMC shares gained NT$2, or 1.2 percent, and closed at NT$104. Rumors of Chang's ailing health first surfaced on the morning of the following session, with the market reacting by sending TSMC shares on a NT$3, or 2.88-percent, dive. Most notably, on the afternoon of Jan 9, Morris Chang attended a public engagement and disproved rumors of his ailing health. TSMC shares began recovering following the day of the rumors' release, gaining 1 percent in each of the next two consecutive sessions, and closed at NT$102 on Jan. 10, while reaching NT$103 at the end of yesterday's session.

FSC Chairman Tseng Ming-chung stated that investigations are ongoing, tracking market transaction orders on TSMC shares and first records of the rumors' release across media and news outlets. Tseng stated that those responsible may face legal consequences in addition to regulatory penalties including the revocation of licenses if their infractions were found to be illegal. Tseng emphasized that the revocation of licenses will be conducted with the utmost discretion, and that consideration for contingency measures will be provided for alleged offenders as investigation uncovers more details.

Tseng however stated that his office currently does not have a defined list of suspect traders or financial institutions domestic or foreign.

Meanwhile, law makers yesterday urged Tseng to exact the most severe penalty to offenders responsible for disrupting the mechanisms of the free markets. Lawmakers deemed the rumor-mongering "reprehensible," and urged the FSC to exact the most severe penalties in order to deter such market disruptions.

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