Thu, Apr 05, 2001 page18

• Securities firms pick new chair

  SHOW OF SUPPORT Experts say the government intervened in the Chinese Securities Association's election and that it gives the DPP a boost in year-end political elections

  • By Stanley Chou / STAFF REPORTER
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  After the fierce competition of recent weeks, the Chinese Securities Association (券商公會) finally elected the DPP-backed Chien Hung-wen (簡鴻文) as its new chairman in an election held yesterday.

  Chien won the most votes -- 216 -- for membership on the association's board of directors in a 10-hour election that began yesterday afternoon, while Yau Chi-huei (姚棋輝), incumbent chairman of the association supported by the KMT, came tenth place with 189 votes.

  More importantly, Chien and his affiliates won 27 of the 33 seats on the board of directors whose members vote the chairman of the board, giving them an overwhelming victory in the election.

  The election has attracted unusual attention among securities circles over the last few months as local politics has been a major factor in it.

  Chien, chairman of International Securities Co (國際證券), a medium-size securities firm, has won support from the DPP administration, including that of the Ministry of Finance and the Presidential Office.

  For his part, Yau has been strongly supported by the KMT and his personal friend Wu Nai-jen (吳乃仁), the DPP secretary-general. Wu's involvement has further complicated the situation. Both parties claimed that they controlled more than half of the association's 202 members.

  Each licensed securities broker has one vote while an integrated securities firm which has three licenses for securities brokers, dealers and underwriters holds three votes. The combined total of votes for securities brokers and firms is 357. Each voter is allowed to cast multiple votes when electing the association's directors. After the directors have been determined, they themselves elect a chairman from among their number.

  Since this is the association's first election since the DPP came to power last year, whether the DPP's candidate could win the association's chairmanship has come to be seen as an indicator of the securities industry's political stance.

  Consequently, as the year-end elections for legislators and local government chiefs are approaching, the result of yesterday's election could give a boost to the DPP as it won the leadership of the securities industry.

  The Ministry of Finance was accused of intervention with the election from the start, but finance minister Yen Ching-chang (顏慶章) reiterated time and again that the government was not involved in the election.

  Speaking to lawmakers yesterday after the election result was announced, Yen said: "There are 32 votes controlled by the state-owned banks' trust departments, and these votes went to Chien. But that's it. The administration has not tried to influence or intervene directly in the election."

  However, Yen stressed that the nature of the association is different from other industry associations.

  "According to the Securities Exchange Law, the association has been defined as a self-regulatory organization which has a duty to coordinate the securities industry and handle the government's policies," Yen said.

  But Dicky Dai (戴震), a senior market commentator and former executive at a local securities company, doesn't agree.

  "Yen's comment was to provide a legitimate reason for [the government's] intervention with the election. Nobody believes what he said [about the intervention]. The same thing happened with the Bankers' Association since the administration would like to control all industry associations under its supervision," Dai said.

  "The finance ministry's stand is understandable," said Henry Cheng (鄭百亨), managing director of Manulife Funds Direct.

  "However, the association has not been successful in developing its self-regulation, in comparison with the National Association of Securities Dealers [NASD] of the US, which launched the successful NASDAQ and carries out disciplinary actions against fraudulent brokers and dealers." Cheng believes the ministry focused on how to pave the way for DPP victory in the year-end elections.

  "The securities industry has lots of employees and millions of investor clients. It's a very influential and powerful industry after all."
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