Representatives of Chang Hwa Bank (彰化銀行) yesterday said the bank had decided to penalize President Chen Chen-chao (陳辰昭) for his behavior in the share sale of Taiwan Development Corp (TDC, 台灣土地開發). They say he breached corporate governance rules as stipulated by the financial oversight authorities.
The punishment comes in the wake of strong pressure on the bank from regulators to enforce management discipline, despite the fact that the bank had already suspended its chairman Chang Po-shin (
"The bank board decided unanimously to record a reprimand of Chen in the ad hoc board meeting today," the bank's spokesman Miles Chang (
The bank's senior vice president, James Chen (陳允進), received the same disciplinary measure, Chang said, adding that both Chen and Chao had accepted the punishment without incident.
The two high-level bank officials are suspected of involvement in the illegal trading of Taiwan Development shares. President Chen Shui-bian's (陳水扁) son-in-law, Chao Chien-ming (趙建銘), was indicted for his involvement in the case.
Prosecutors decided not to pursue an indictment against the bank's chairman, Chang Po-shin, earlier this month.
Even so, the Financial Supervisory Commission demanded earlier this week that the bank discipline both Chen Chen-chao and James Chen, saying that the absence of judiciary punishment does not necessarily preclude the need for some kind of administrative punishment.
The bank said it will submit the board's decision in official documents to the regulator early next week.
In the face of the regulator's push for a disciplinary action, the bank's union expressed strong support to the management, according to a statement issued late on Thursday.
In the statement, the union said that the disciplinary action was unnecessary, since the insider trading cases against both Chen Chen-chao and James Chen were dismissed by prosecutors.
Separately, the union said in the statement that it still opposed the merger between Chang Hwa Bank and Taishin Financial Holding Co (
The union said it suspected the commission is playing a "double-standard" game against the Changhwa-Taishin merger, compared with Chinatrust Financial Holding Co's (中信金控) controversial investment in larger rival Mega Financial Holding Co (兆豐金控).
Last week, the commission required Chinatrust Financial to offload a 3.9 percent stake in Mega Financial on the open market within a year, which resulted in the resignation of Jeffrey Koo Jr (
The union accused Taishin Financial of using high leverage financial
operations and not its own funds to purchase shares of Changhwa, which
should be treated in the same way as the Chinatrust Financial case.
The union also accused the commission of favoring big conglomerates to
acquire small banks like Changhwa. The commission was not available for
comment as of press time.
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