State-run First Securities Investment Trust Co (第一金投信, FSITC) agreed yesterday to compensate investors for losses from funds managed by three former employees who were allegedly involved in stock manipulation.
The fund house, the asset management arm of First Financial Holding Co (第一金控), said in a statement that it would set aside a provision of NT$19 million (US$640,400), equivalent to losses linked to potentially tainted investments in Prescope Technologies Co (普格) last year, and make payments after independent accountants confirm the accuracy of the figures.
FSITC’s move came after the Financial Supervisory Commission on Monday suspended the firm from issuing new funds and asked it to propose compensation and remedy plans.
“FSITC is conducting a thorough review of its operational and investment procedures, and will come up with enhancement measures to prevent any repeat incident,” the company said in a statement.
Last week, the company sacked three fund managers — Hsu Hung-cheng (許弘政), Hsu Shun-chen (許訓誠) and Chaio Jen-chieh (喬仁傑) — who reportedly bought shares in Prescope in exchange for kickbacks, incurring losses for funds under their management.
The scandal broke after investigators probing irregularities at Prescpoe spotted abnormal transactions.
The incident drew the wrath of the Ministry of Finance, the largest shareholder in all state-run financial institutions, including First Financial.
On Monday, the board of First Financial approved the resignation of FSITC chairwoman Hung Hsin-shih (洪新湜), who will retain her position as the group’s spokeswoman.
The behavior of the three fund managers has cast a further shadow over the integrity of the industry four months after their peers at ING Securities Investment and Trust Co (安泰投信), the local unit of Dutch financial services provider ING Group, reportedly mismanaged government-owned funds in order to line their own pockets.
The Dutch-owned fund house agreed in November last year to pay full compensation to institutions and individual investors for losses related to investments in Ablerex Electronics Co (盈正豫順電子).
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