Taiwan Int'l, Fulltech fall after Pang probe

More than 50 officers from the prosecutor's anti-corruption taskforce and the investigation bureau conducted the searches on March 5 at six locations, including the offices of securities brokerages and homes of related persons, the Taipei District Prosecutors' Office said in a March 6 statement.

Prosecutors searched the offices of Taiwan Securities and two units, as well as homes including that of its Chairman Chang Yuan-ming and of PEMGroup's former Taiwan manager, according to Wang Wen-de, a spokesman at the prosecutor's office Monday.

Pang, who died on Sept. 12, was accused by the U.S. Securities and Exchange Commission of lying to Taiwanese investors about his credentials, forging insurance documents and paying existing investors with funds raised from new ones, while claiming the returns came from investments in life insurance policies. Taiwanese investors lost more than US$800 million from PEMGroup investments, according to the prosecutor's statement.

“The company didn't sell any PEMGroup products,” Chang Ching-lung, a spokesman for Taiwan Securities said by telephone Monday.

A preliminary investigation by Taiwan Securities showed some former employees may have privately sold US$15 million worth of PEMGroup products to investors, Jeff Chiu, president at the Taipei-based brokerage said at a press briefing in Taipei Monday. The company will continue to cooperate with the prosecutors in the probe, Chiu said.

Taiwan Securities fell 5.7 percent, the most since Feb. 5, to NT$8.28. The brokerage said in an exchange filing on March 6 that it was one of the companies searched. It denied any wrongdoing by the company or its chairman.

Fulltech Fiber dropped 4.5 percent, the most in a month, to NT$23.30. The company, which has Chang among its board members and Taiwan International as a 2.6 percent shareholder, was also searched, it said in a March 6 filing. Fulltech is not related to PEMGroup's business in Taiwan and will cooperate with the investigation, it said.

Irvine, California-based PEMGroup collected money from investors while not using those funds for the purposes which had been stated, the prosecutor's office said in the March 6 statement. PEMGroup also used the securities group of a person surnamed Chang to help build trust with investors, the statement said, without naming the company.

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