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Fubon Asset Management fined over irregularities

The Financial Supervisory Commission on Friday announced it fined Fubon Asset Management Co (富邦投信) NT$3.6 million (US$112,574) for irregularities involving bond funds.

Fubon Asset Management president Michael Ding (丁予嘉) will be suspended from work for three months over the irregularities, the commission said on its Web site.

Three other executives at the company will also be suspended from work for periods ranging from three months to one year, the commission said. Among them, senior vice president Ku Shu-hwa (顧素華), who has been nicknamed "the queen of bond trading," will be suspended from work for one year, it added.

The implementation of the penalties will start on Feb. 15, the commission's Securities and Futures Bureau said on Friday. Despite the punishment meted out to executives, the bureau said that the fund managers at Fubon Asset Management still retain their licenses and are still able to serve their clients and safeguard investors' rights.

Fubon Asset Management is a unit of Fubon Financial Holding Co (富邦金控). The company is the nation's largest securities investment trust company and manages a total of 23 funds for investors, including seven bond funds. The company's bond funds reportedly had a combined size of NT$132.6 billion last year.

More than 70 percent of the nation's mutual funds are invested in bonds, according to the Securities Investment Trust and Consulting Association.

Fubon Asset Management was penalized by the regulator for breaking the Securities Investment Trust and Consulting Act (證券投資信託及顧問法) when it traded among its mutual funds, including Fubon Fu Tai Fund (富邦福泰平衡型基金) and Fubon Dragon Bond Taiwan Fund (富邦千禧龍債券基金), from May 2004 to October last year.

"We'll conduct a deeper probe into the issue and a review of managers and our internal control," Victor Kung (龔天行), president of Fubon Financial, said on Friday.

"We have enough capital to cope with possible redemption on the funds," Kung said.

The internal control problem at Fubon Asset Management is the second irregularity the commission has found since July 2004, when the United Securities Investment Trust Corp (聯合投信) halted redemptions on some of the bonds in its portfolios when it ran out of cash. To ease its capital shortage, United Securities Investment then sold three bond funds that were estimated to have NT$10 billion in assets to Fubon Asset Management.
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