Lawmakers yesterday slammed the nation's financial regulator over its efforts to crack down on illegal stock trading and embezzlement activities, citing the drawn-out process and the unsatisfactory amounts of compensation recovered.
From 2003 to the end of last year, only around 30 out of the 127 embezzlement and insider trading cases investigated were put up for indictment, according to statistics from the Financial Supervisory Commission.
During the same period, the Securities and Futures Investors' Protection Center (投資人保護中心) filed 29 class action lawsuits on behalf of investors and claimed NT$21.9 billion (US$677 million) worth of damages, but recovered only NT$700 million in compensation, statistics showed.
Taiwan Solidarity Union Legislator Lo Chih-ming (羅志明) and independent Legislator Chiu Yi (邱毅) both criticized the low indictment rate of the regulators and asked authorities to show their dissatisfaction with the results.
People First Party Legislator Christina Liu (劉憶如), meanwhile, lashed out at the commission's rough reporting standards, saying they lacked clear information about cases in which no one has been indicted and demanded the financial watchdog prepare detailed reports for a public hearing on illegal trading scheduled for next Tuesday.
Liu listed 26 cases of embezzlement and insider trading, including the Pacific Electric Wire and Cable Co (太平洋電線電纜) and Procomp Informatics Co (博達科技) cases, where NT$17.1 billion and NT$7 billion were allegedly stolen by high-ranking executives.
Embezzlement can be conducted using many measures, including fake transactions of non-publicly traded shares and fake deposits and receivables, as well as the issuance of derivatives in the forms of Euro-convertible bonds and global deposit receipts, as seen in the Procomp and Infodisc Technology Co (訊碟科技) cases, Liu said, while asking the regulator to propose effective countermeasures.
In response, the commission said in a written report that it is determined to crack down on these unlawful activities through amendments to the Securities and Exchange Law (證券交易法).
The changes will demand high-level corporate governance through the establishment of independent board directors and stricter definitions of insider trading as well as increasing the obligation on public certified accountants and underwriters.
The commission said it has also deepened ties with prosecutors and streamlined processes, standard operation procedures and confidentiality requirements in a bid to expedite investigations and in turn raise the chances of obtaining indictments and sentences, according to the report.
Insider trading has tarnished the commission's reputation after one of its highest-ranking officials was forced to quit last year after being accused of illegal activities.
Lee Chin-chen (李進誠), the former director-general of the Examination Bureau, resigned in July last year over his suspected involvement in the illegal trading of Power Quotient International Co (勁永國際) shares. Lee was indicted in October and could receive an eight-year prison sentence.
Lee's position has remained vacant ever since. Commission Chairman Kong Jaw-sheng (龔照勝) told lawmakers that a new candidate will be announced within a month.
"I have an ideal candidate in mind," Kong said, without further elaboration.
The commission's vice chairman Lu Daung-yen (呂東英) has been performing Lee's role since he left. According to the law, the vacancy should be filled within a year.