Taiwan Stock Payment Defaults Are Being Investigated : Securities: The problem has plunged the market into crisis.

TAIPEI, Taiwan â€”  Authorities are investigating a string of huge stock payment defaults that have plunged the market into crisis.

The government also took steps to stabilize the exchange, the value of whose stocks tumbled 6.1% in panic selling Thursday. The market ended mixed Friday after institutions emerged to buy blue-chip stocks at low prices.

Bureau of Investigation agents have begun looking into whether major market player Lei Po-lung, believed responsible for the defaults, broke securities laws, a bureau spokesman said.

The stock exchange said late Thursday that it had uncovered a further $210 million in defaults on payments to brokerages for share purchases, bringing the total announced over two days to $277 million.

The stock exchange ordered six local brokerages hit by the defaults to suspend operations indefinitely.

Lei, one of the big individual players who dominate the volatile exchange, told newspapers he was responsible for the defaults, which were linked to jailed textile tycoon Oung Ta-ming.

Oung was arrested last week for failing to appear in court on charges of illegal trading in a $22-million stock scandal that caused the downfall of a cabinet minister last year.

Lei said last week’s defaults occurred because the Hualon group, which Oung heads, asked him to buy stocks, then declined to provide the money for them.

Brokers said government measures gave a badly needed psychological boost to the market Friday but confidence was still shaky. The weighted index ended down just 4.09 points but was still at a 20-month low of 3,437.60.

The Finance Ministry said it would ask the central bank to speed up approvals for remittances of foreign equity investment funds into Taiwan. The bank announced that it had approved a $60-million remittance by Fidelity Investments of the United States.

The Taiwanese Securities and Exchange Commission said foreign institutional investors were waiting for approval to remit $415 million to Taiwan, although it will take time for the money to arrive even after approval is given.

Dealers said the central bank also allowed looser liquidity in the money market to minimize the impact of the stock defaults.