Three executives of Taiwanese electronics company BenQ were arrested under allegations of insider stock trading involving the timing of stock sales and announcements of losses incurred by the now-defunct BenQ Mobile. Two of the executives were released on on bails of NT$5 million and NT$2 million (about $150,000 and $60,000 U.S. dollars) respectively, while the third, BenQ’s chief financial officer Eric Yu, was refused bail and remained in custody early Thursday.
The allegations stem from allegations that BenQ executives sold shares of the company stock just prior to announcing significant losses incurred by BenQ Mobile, the mobile phone business BenQ acquired from Siemens AG in 2005. BenQ Mobile’s share price plummeted after the announcement.
BenQ pumped some $600 million into the mobile unit in an effort to reduce costs and boost low sales, but the effort ultimately failed and BenQ was unable to find a buyer for the ailing mobile business. The company announced late last month that it planned shut down BenQ Mobile, carve it up, and sell off the assets. BenQ’s cost cutting measures and layoffs of nearly 3,000 employees created a public outcry in Germany, where the former Siemen’s AG unit was based.
In a statement, BenQ said it is fully cooperating with the Taoyuan District Prosecutor’s Office’s investigation and company chairman K.Y. Lee defended his company in an open letter, and maintained that CFO Yu was innocent. “Contrary to media speculation that BenQ might be involved in insider trading or irregularities involved in the selling/buying of stock, this speculation is false,” Lee wrote in the letter. “Negative media stories about Mr. Eric Yu are baseless and untrue[…]Eric has selflessly served BenQ for many years and I believe that his name will be cleared as soon as possible.”
BenQ plans to hold a board meeting Friday to update its directors and supervisors on the insider trading probe. Reports have investigators so far questioning seven BenQ officials, including four human resources officers.
