Fri, Apr 05, 2013 - Page 14 News List

FSC promises heavy punishments

By Kevin Chen  /  Staff reporter

The Financial Supervisory Commission (FSC) said yesterday it would mete out heavy penalties and fines to fund houses and managers found to have irregularly handled assets under their management.

The commission’s warning, posted in a press release on its Web site, came after prosecutors launched another probe into alleged insider trading by fund managers at two securities investment trust firms on Wednesday.

Chu Nai-cheng (瞿乃正) and seven others at Yuanta Polaris Securities Investment Trust Co (元大寶來投信) and Jih Sun Securities Investment Trust Co (日盛投信) were summoned for questioning by prosecutors late on Wednesday, the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) reported yesterday.

Investigators also searched the offices of the individuals in question, who were allegedly making nearly NT$100 million (US$3.3 million) in profits by using the government-run Labor Insurance Fund and Labor Pension Fund under their management to manipulate share prices of certain stocks from 2010 to last year, the paper said, citing the Supreme Prosecutors’ Office Special Investigation Division (SID).

The paper said the suspected wrongdoings had caused the two government funds to lose up to NT$1 billion in this period.

Chu, a former manager at Polaris International Securities Investment Trust Co (寶來投信), which was later merged with Yuanta Securities Investment Trust Co (元大投信), was released on NT$1.5 million bail, but barred from leaving the country, the paper said.

The report did not specify other suspects in the investigation, nor the names of companies whose shares were allegedly manipulated by rogue fund managers.

Yuanta-Polaris Securities Investment Trust Co (元大寶來投信) yesterday said in a statement that Chu was no longer a company employee since he had left Polaris before the latter was merged with Yuanta. In a separate statement, Jih Sun said it would cooperate fully with prosecutors during the investigation.

The FSC yesterday confirmed the prosecutors’ latest probe and said it would impose heavy penalties on fund managers and companies if they were found guilty.

The commission last month suspended state-run First Securities Investment Trust Co (FSITC, 第一金投信) from creating new funds, after fund managers Hsu Hung-cheng (許弘政), Hsu Shun-chen (許訓誠) and Chaio Jen-chieh (喬仁傑) reportedly manipulated the share price of Prescope Technologies Co (普格) last year in exchange for kickbacks.

The three suspects were questioned and released on bail on March 1, but the scandal caused Hung Hsin-shih (洪新湜) to resign the chairmanship of FSITC.

The latest investigation is part of authorities’ continuing efforts to crack down on insider trading and other wrongdoing on the local stock market involving rogue fund managers, after reports that some fund managers at ING Securities Investment and Trust Co (安泰投信) allegedly mismanaged government-owned funds to line their own pockets late last year.

In November, Sam Hsieh (謝青良), former vice president of ING Securities Investment, the local unit of Dutch financial services provider ING Group, and his peers were found to have used the government’s Labor Insurance Fund and Labor Pension Fund to make huge profits from manipulating the stock of Ablerex Electronics Co (盈正豫順電子) via dummy accounts, leading the government-owned funds to incur more than NT$100 million in losses in 2010 when Ablerex stock tumbled.

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