Taiwanese authorities have arrested two suspects in an alleged illegal trading scandal involving the Taiwan Stock Exchange-listed JPEX Group. The Financial Supervisory Commission (FSC) ordered the arrests based on its ongoing investigation into the case.
The FSC has been investigating JPEX Group since mid-December 2020 following allegations of insider trading and market manipulation involving a suddenly high volume of shares related to the company. The FSC has been particularly concerned about the high volume of shares traded for JPEX Group, which was allegedly driven by professional traders and P2P investors taking advantage of insider information to buy shares before publicly announcing the news.
Police raided JPEX Group’s offices in Taipei in connection with the case. During the raid, the FSC seized computers and documents related to the investigation. The suspects are alleged to have illegally used insider information to gain a financial advantage in trading JPEX shares.
According to Taiwanese media reports, the FSC has charged the suspects with insider trading, stock manipulation, and infringement of disclosure rules. The FSC has said that they will be dealt with severely if found guilty.
The case is further raising concerns about the integrity of the Taiwan Stock Exchange, given that JPEX Group is listed on the bourse. This is the latest insider trading scandal to involve the Taiwan Stock Exchange; back in 2018, the FSC investigated well-known investor Wang Ziru for insider trading. The FSC reportedly also fined Wang Ziru on multiple occasions.
In light of the ongoing JPEX investigation, the FSC announced in late December 2020 that it was conducting a “top-down review” of listed companies to identify and warn against any trading violations. The FSC is also reportedly considering strengthening the internal governance of listed companies, including the setting of stricter disclosure and regulatory rules. The recent move by the FSC aims to improve the transparency and integrity of the Taiwan Stock Exchange, as well as foster trust in the market as a whole.
