Analysis: Rebar scandal shows FSC defects

For instance, Rebar Group controls a conglomerate of companies including The Chinese Bank, Union Insurance Co (友聯產險), China Rebar Co (中國力霸), Chia Hsin Food & Synthetic Fiber Co (嘉新食品化纖) and Asia Pacific Broadband Telecom Co (亞太固網), which operate in the financial, manufacturing and telecommunications sectors.

The commission should establish a group profile containing all data on affiliate companies to get a broader picture and thereby make it easier to detect possible misconduct and enact damage control measures in the early stage of a crisis, Yeh said.

Strengthening communication and cooperation among parallel agencies within the commission and with other agencies is necessary, he added.

Yeh proposed a mandatory disclosure by all affiliates, perhaps coming in the form of an organizational chart, to help investors see through companies that have complex cross-holdings or an unusual number of affiliates -- all factors which, as in the Rebar case, can facilitate embezzlement and other offenses.