The Taiwan High Court rendered the 105-Jin-Shang-Su-10 Criminal Decision of February 27, 2018 (hereinafter, the “Decision”), holding that for investment recommendations provided by securities investment analyzers on the media concerning the stocks of specific OTC-traded companies, errors in the determination basis, if any, are still different from spreading rumors and do not necessarily constitute an offense of deliberately manipulating share prices.
The facts underlying this Decisionprosecuted by the prosecutor are on the following grounds: The defendantwas a securities investment analyzer who worked at an investment consulting company as an analyzer and operated business by analyzing stocks on television. Although the defendant was aware of the impact of his comments on investors, he still spread false comments concerning the good profitability of a specific company (hereinafter, the “Company at Issue”) on TV programs or via mobile phone short messages to the whole country to affect the share prices of the Company at Issue. Such behavior violated Article 155, Paragraph 2 of the Securities and Exchange Law, to which Subparagraph 6 of Paragraph 1 of the same article (which provides: “Rumors or false information shall not be spread in an attempt to affect the trading prices of securities in a centralized securities exchange market”) applies, and allegedly committed the offense under Article 171, Paragraph 1, Subparagraph 1 of the same law. Since the defendantwas exonerated in the original decision, the prosecutor appealed.
According to this Decision, since the investment recommendations made by the defendant,through his analysis as a securities investment analyzer,were based on the share price movement, industry trends and operating outlook of the Company at Issue, such recommendations were based on reasonable judgment and could not be concluded as rumorsspread to manipulate share prices. In addition, since an investment consulting company causes its securities analyzers to analyze share prices on the media, provide investment recommendations and send periodic short messages to solicit members by informing stock information, the recommendations, on purchases or long-term holding, by the defendantafter the research and analysis of the stock of the Company at Issue were merely for the reference of the viewers or members. Whether they would purchase the stock of the Company at Issue would still depend on the judgment of the viewers or members, which could not be easily swayed by the defendant. Therefore, the prosecutor’s arguments were not acceptable by the court since the burden of proof was hardly assumed–the prosecutor concluded that the defendant had violated the Securities and Exchange Law simply by concluding that the determination basis was erroneous based on one of the many determination factors for share prices, without producing concrete evidence to prove that the defendant had attempted to affect share prices or spread false rumors. As a result, the prosecutor’s appeal was dismissed in this Decision, and the decision which had exonerated the defendant was upheld.