The Consumers’ Foundation (消基會) yesterday called on the Control Yuan to investigate whether the Financial Supervisory Commission (FSC) neglected its duties to supervise local banks, resulting in substantial losses for investors.
The foundation cited the dispute over investments in structured notes, saying that FSC tallies showed that local banks had received 689 complaints about structured notes totaling NT$2.35 billion between July 1 last year and April this year.
Four hundred people who lost on their investment in structured notes have formed a self-help association.
Consumers’ Foundation acting chairman Hsieh Tien-jen (謝天仁) said the victims complained that financial advisers had only touted the potential high returns of structured notes, but not informed them that the notes do not offer principal protection if losses exceed 40 percent.
After Lehman Brothers Holdings Inc’s filed for bankruptcy protection on Monday, local investors have begun to worry that their investments could crumble. Hsieh called on the FSC to freeze Lehman Brothers Taiwan Securities Ltd’s assets, in order to minimize investor losses.
As structured notes are high-risk products that are more suitable for institutional investors, Hsieh said other countries had an investment minimum of US$250,000.
In Taiwan, however, investors need only invest US$10,000, Hsieh said, adding that the FSC should have had a mechanism to protect ordinary investors who sought steady returns with less volatility.
In response, former foundation chairman Cheng Jen-hung (程仁宏), who is now a member of the Control Yuan, said the Control Yuan had begun an investigation to determine whether the FSC should be held responsible.
In response, an FSC official said yesterday the commission was open to the complaints and criticism of consumers, but insisted that it had spared no efforts to safeguard the rights of investors who have bought stocks or bonds issued or guaranteed by Lehman Brothers.
“We are doing our best to assist investors who may suffer losses [after Lehman Brothers filed for bankruptcy] to deal with follow-up matters,” FSC Chief Secretary Lu Ting-chieh (盧廷劼) told a media briefing yesterday.
Lu said that he believed that the FSC had acted appropriately.
If the Control Yuan finds the FSC neglected its duties, Lu said his commission would shoulder the responsibility.
When asked whether the commission had asked banks to file class action lawsuits on behalf of investors and pay litigation costs as the FSC mentioned one day earlier, Lu downplayed the statement, saying there would be certain legal conditions, such as whether an investor had been fully informed of risks, and that filing suits would therefore not be mandatory in all cases.
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Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day