The controversial Tuofu Bao (託付寶) investment service, relaunched by Jko Fintech Co (街口金融科技) on Monday, has been suspended over claims that the service provides a minimum rate of return, the Financial Supervisory Commission (FSC) said yesterday.
Tuofu Bao allows people to use the electronic payment service of Jkopay Co Ltd (街口支付), fully owned by Jko Fintech, to buy into the “JKO Multi-Asset Fund,” which is managed by Jko Asset Management Co (街口投信).
Jko Fintech chairman Kevin Hu (胡亦嘉) has said that the investment service would generate a return of 1.2 to 2.5 percent.
Photo: Chen Ping-hung, Taipei Times
“Although Jko stressed that it did not offer any guaranteed returns and its expectations are calculated based on its own algorithms, we still have doubts about its claims,” Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) told a news conference in Taipei.
“Telling investors that they are likely to gain at least 1.2 percent return sounds similar to offering guaranteed returns. Jko apparently misleads its investors,” Tsai added.
Another controversial part of the service is its redemption policy, Tsai said.
Jko Fintech asks investors to agree that when they sell their fund units, the redemption amount would be based on its own algorithms and not the net value of the fund, Tsai said.
The commission would ask the companies to explain the algorithms to see how they work, Tsai said, adding that they should not manipulate algorithms to give a minimum rate of return.
The bureau on Wednesday barred Jko Asset Management from accepting any new capital through Tuofu Bao until the issue is resolved Tsai said.
The fund’s custodian bank, state-run Chang Hwa Bank (彰化銀行), has refused to hold NT$150 million (US$5.1 million) in new investments the service had attracted from 5,000 investors since Monday, Tsai said, adding that Jko must refund the money to investors.
“Although Jko Fintech expects to sidestep FSC regulation, as it is not a financial company, the commission could still address the matter by regulating Jko Asset,” FSC Deputy Chairman Jean Chiu (邱淑貞) said.
Jko Asset has an obligation to ensure the services offered by its partners are legal and compliant, even though the company is 25 percent owned by Jko Fintech, Chiu said.
The commission suggested that the companies apply to enter into the FSC’s regulatory sandbox, where they could conduct an experiment to see if their innovative business model works smoothly, Tsai said.
Hu yesterday told the Taipei Times by telephone that he would continue discussions with the FSC to win approval to offer the financial service.
“I think there are some misunderstandings in our previous communications ... so we are willing to suspend our service to show our sincerity,” Hu said.
The company would soon revise its documentation to prevent any misunderstanding of a guaranteed return, he said.
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