Three investment companies fined over financial irregularities

Taipei-Taiwan’s top financial regulatory body on Thursday imposed fines totaling NT$13.5 million (US$475,687) on three asset management firms over their employees’ involvement in financial irregularities.

The Financial Supervisory Commission (FSC) said the three companies: Fuh Hwa Securities Investment Trust Co., Capital Investment Trust Corp., and Uni-President Assets Management Corp., were each fined NT$4.5 million, for violations of the Securities Investment Trust and Consulting Act.

FSC Securities and Futures Bureau Deputy Director-General Tsai Li-ling (???) said the act stipulates that securities investment firms should conduct business “in good faith and with a duty of due care,” and should not engage in any trading that jeopardizes the rights and interests of their customers, which these companies have violated.

Meanwhile, a total of 10 employees at the three companies involved were also punished, with the FSC ordering three of them removed as department heads and banned from returning to their positions for three years, with others barred from returning to the business for between one month and one year.

The firms were also banned from signing new contracts with customers to conduct full fiduciary discretionary investment business for three months and face other restrictions on conducting securities investment businesses for between six months and five years, according to Tsai.

The FSC also gave Capital Investment Trust Corp. and Uni-President Assets Management Corp. three months to conduct a review to determine whether their chairpersons and presidents should be replaced to take responsibility for repeated scandals.

These two firms were also fined in 2020 over similar violations, according to FSC.

The penalties were levied after Taipei prosecutors in February indicted a former labor ministry official and members of four local asset management firms on charges of corruption and manipulating stock prices in a labor fund bribery case.

According to the indictment, Yu Nai-wen (???), former head of the domestic investment division of the Bureau of Labor Funds (BLF) under the Ministry of Labor (MOL), was indicted for accepting bribes from PJ Asset Management Co. CEO Daniel Tarng (???) and executive Chiu Yu-yuan (???).

Fuh Hwa Securities Investment Trust Co., Capital Investment Trust Corp., and Uni-President Assets Management Corp., meanwhile, were commissioned by the MOL to make investment on behalf of the BLF.

Others indicted include Uni-President Assets Management Corp. Vice President Chueh Chih-chang (???), managers Sun Min-cheng (???), Kuo Shih-ching (???) and analyst Yu Chien-yeh (???).

The list also included Fuh Hwa Securities Investment Trust Co. Chief Investment Officer Chiu Ming-chiang (???), asset manager Liu Chien-hsien (???) and analyst Chen Chou-lun (???), as well as Capital Investment Trust Corp. Vice President Hsieh Chih-ying (???) and analyst Tang Ming-chen (???), prosecutors said.

Prosecutors said Tarng and Chiu had collaborated since May 2019 to manipulate the stock price of Far Eastern Department Store in the hope of boosting it before selling their shares for profit from April to July 2020.

However, the return was not as profitable as the two had expected, so they contacted Yu, who was responsible for managing the labor fund, to manipulate Far Eastern’s stock price using purchases made by the labor fund.

Since July 2020, Yu has been in close contact with PJ Asset Management Co., Uni-President Assets Management Corp., Fuh Hwa Securities Investment Trust Co. and Capital Investment Trust Corp., all of which held a large number of Far Eastern shares.

Yu has also been accused of violating the Securities and Exchange Act by directly asking these companies to buy Far Eastern shares at higher than market prices.

Source: Focus Taiwan News Channel