The Financial Supervisory Commission (FSC) yesterday penalized six banks for failing to protect customers buying investment products created by Private Equity Management Group Inc (PEM Group).
The banks sold structured note products developed by the California-based group to local investors between late 2008 and early last year only to find the firm set up by the late Danny Pang (彭日成) accused by the US government of defrauding investors out of hundreds of millions of dollars in a Ponzi scheme.
While the banks acted to repurchase PEM Group products, many investors still incurred massive losses and several lawmakers have demanded the FSC take action against the banks.
Based on FSC statistics, about 20,000 Taiwanese investors purchased more than NT$25 billion (US$782 million) in securities sold by the PEM Group.
The commission yesterday said in a statement on its Web site that Hua Nan Commercial Bank (華南銀行), Bank SinoPac (永豐銀行), Cosmos Bank Taiwan (萬泰銀行), EnTie Commercial Bank (安泰商業銀行) and Taichung Commercial Bank Co (台中商銀) would be banned from new investment trust business for six months.
The commission said it would also censure Standard Chartered Bank (渣打銀行) but would not suspend the lender’s investment trust business because it had acted to protect its customers much earlier than the others.
Standard Chartered said in April last year that it would repurchase all the PEM Group products it had sold at full face value plus accrued interest.
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