HTC sues Citi in Taiwan after share price fall

HTC, the world's No.4 smartphone maker, has filed a criminal complaint against Citigroup Inc's Taiwan unit, alleging the bank published false information that led to a fall in HTC's share price, a Taiwan prosecutor said on Tuesday.

HTC, whose rapid rise in the cut-throat handset industry had made it an investor darling until early this year, has lost much of its lustre in recent weeks as its models struggle to compete with Apple Inc's iPhone and Samsung Electronics Co Ltd's Galaxy range.

Its shares have tumbled from a high of more than T$1,200 in April to as low as T$403 earlier this month. HTC has twice cut its earnings forecast recently, stoking investor concern over future profits.

"HTC submitted its case in August and we have been in the process of handling it," said Huang Mou-hsin, deputy chief prosecutor at the Taipei Prosecution Office. "HTC sued Citi Global Markets for violating stock transaction law," he said, declining to elaborate further.

HTC declined to confirm or deny the action, saying it did not comment on legal cases. Citi Global Markets Taiwan officials had no immediate comment. Taiwan newspapers reported on Tuesday that HTC and Citi had run out of time for a settlement, so prosecutors had stepped in.

Suing the big bad bank

HTC is fighting legal battles on several fronts and faces a crucial ruling in the United States on Wednesday in a patent case with arch-rival Apple that could result in a ban on HTC's handsets being sold in the United States.

The suit is seen as a proxy for the larger fight for market share between Google Inc's Android cellphones and tablets, many of which HTC makes, and Apple's product line. Samsung, which also makes Android products, is locked in similar court fights with Apple. The International Trade Commission, a U.S. trade panel that investigates patent infringement involving imported goods, will deliver its ruling on Wednesday.

HTC shares were up 2.5 percent in early Tuesday trading at T$426.50.

"The rise is because the current share price is too low and valuations are way under," said KGI Securities analyst Richard Ko in Taipei. "The price already reflects the risk of future court judgements."

Reuters