ING Securities Investment and Trust Co (ING SITC, 安泰投信), the local asset management unit of Dutch financial service provider ING Group, yesterday said it would make NT$256 million (US$8.74 million) in payments to institutional and individual clients for losses related to investments in Ablerex Electronics Co (盈正豫順電子).
ING SITC, which agreed earlier to compensate only losses managed by a former associate, said it decided to take further action as a goodwill gesture to protect its business in Taiwan and show its commitment to the market.
The company has come under fire from lawmakers, the Council of Labor Affairs and the Labor Pension Fund Supervisory Committee for mishandling the Labor Insurance, Labor Pension and Public Service Pension funds in 2010.
ING SITC chief executive Ashwin Mehta told a media briefing: “We will pay in full the amounts requested by government pensions’ clients” for losses in connection to investments in Ablerex, a listed local power supply equipment vendor.
Ablerex shares surged from NT$185 at its initial public offering in September 2010 to NT$565 in five trading sessions. The Financial Supervisory Commission launched a probe into the abnormal stock movements and found that former ING SITC vice president Sam Hsieh (謝青良) and peers at other houses had made personal profit by manipulating Ablerex share prices via dummy accounts.
The government-owned funds incurred more than NT$130 million in losses after the shares they purchased at the artificially inflated price saw a steep decline.
“ING SITC did not benefit from Hsieh’s misbehavior,” Mehta said after stock analysts accused ING SITC on television talk shows of being party to the manipulation.
Mehta said the company will take legal action against Hsieh, but did not elaborate further.
In line with the principle of fairness, the company will extend compensations to individual clients with stakes in mutual funds linked to Ablerex shares, Mehta said.
ING SITC put the payment amount at about NT$34 million although it does not know the exact number of investors or the sum involved at this juncture, Mehta said.
“It will take some time to track down the clients, but we will seek help from banking partners and publish details on the company’s Web site by Dec. 1,” Mehta said.
ING SITC chairman Scott Tsou (鄒鴻圖) voiced regret about the incident and the uproar it raised. He offered an apology and promised to strengthen internal oversight.
With almost 200 employees in Taiwan, ING SITC is one of the largest fund houses in terms of asset under management, Tsou said.