The Financial Supervisory Com-mission yesterday fined China Development Industrial Bank (中華開發工銀) NT$10 million (US$307,200) for serious internal control flaws in its decisionmaking process involving several investment transactions.
The commission also demanded that the company, an investment banking unit of China Development Financial Holding Corp (中華開發金控), investigate and punish people responsible for the mistakes as well as submit the results for the regulator's review within one month.
The financial watchdog, however, was tightlipped about who should bear responsibility for the irregularities and if this includes the investment bank's chairman Angelo Koo (
"We have handed over our ad hoc inspection results to the prosecutors who are investigating any potential breach of trust that the company's management may have committed," the commission's spokesperson Susan Chang (張秀蓮) said yesterday.
This is the second time that the commission has imposed significant penalties on China Development Financial and its subsidiaries this year.
In May, the regulator demanded that the financial holding company dismiss Daniel Wu (吳春台) as board director at China Development Industrial Bank and chairman of its affiliate China Development Industrial Bank & Partners Investment Holding Corp (開發國際) for his leading role in the company's disputed hostile takeover bid for Taiwan International Securities Corp (
This time, the commission found during its inspection of China Development Industrial Bank in August and October that the bank had committed serious internal control flaws in the auction of its overseas investment in 24 biotech companies and 53 information technology firms late last year.
The commission said that the bank's management failed to provide the most updated and detailed information for the board to make a proper decision on the case and that it favored one bidder by leaking offers made by a competitor.
As a result, the bank had to pay US$250,000 in compensation to the competitor, thus seriously damaging the rights and interests of shareholders of the investment bank.
The investment bank's decision not to further invest in an affiliate spun off from its asset management subsidiary, which reduced its holding down to 12.25 percent from 49 percent, also harmed its shareholders' interests, the commission added.
In related news, the nation's fair trade watchdog yesterday fined six local financial institutions a total of NT$7.2 million (US$221,400) for including inappropriate clauses in their loan contracts.
The six firms included Singfor Life Insurance Co (
Additional reporting by Jackie Lin
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