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HTC execs detained over leaked trade secrets; shares tumble

A new HTC Android-based smartphone Sensation is displayed during a news conference for the launch of the product in Taipei May 27, 2011. REU
A new HTC Android-based smartphone Sensation is displayed during a news conference for the launch of the product in Taipei May 27, 2011. REU

TAIPEI (Reuters) - Three HTC Corp design executives were arrested on suspicion of leaking trade secrets, sending the Taiwanese smartphone maker's shares tumbling on Monday as its troubles deepened amid a wave of senior staff departures and disappointing sales.

Taipei prosecutors confirmed that HTC vice president of product design Thomas Chien, research and development director Wu Chien-Hung and senior manager of design and innovation Justin Huang were arrested on Friday.

Chien and Chien-Hung remain in custody, while Huang was released on bail, prosecutors office spokesman Mou Hsin Huang said.

The executives were also accused of making false commission fee claims totaling around T$10 million ($334,200). No further details about the allegations were immediately available.

The arrests came in response to a complaint filed by HTC last month accusing the executives of leaking trade secrets.

HTC declined to comment except to say the investigation had no impact on its operations. Chien and Chien-Hung could not be reached and Huang was not immediately available to comment.

Media reports citing the police said the executives were planning to use stolen new interface technology to set up a new mobile design company aiming at Chinese vendors.

Shares of HTC lost 6.4 percent to T$146.5 at 0250 GMT, versus a 0.2 percent fall in the broader market.

Rocked by internal feuding and executive exits, and positioned at the high end of a smartphone market that is close to saturation, HTC has seen its market share slump to below 5 percent from around a quarter five years ago.

Its stock price is at 8-year lows, and it has warned it could make its first operating loss this quarter.

($1 = 29.9245 Taiwan dollars)

(Reporting by Clare Jim; Editing by Stephen Coates)

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