The Financial Supervisory Commission (FSC) yesterday fined three asset management firms NT$4.5 million (US$159,909) each for last year buying shares in a company at the direction of a Ministry of Labor official while conducting discretionary trading for the nation’s labor funds.
Fuh Hwa Securities Investment Trust Co (復華投信), Capital Investment Trust Corp (群益投信) and Uni-President Assets Management Corp (統一投信) accepted requests from Yu Nai-wen (游迺文), former head of the Domestic Investment Division of the Bureau of Labor Funds, to purchase Far Eastern Department Store Ltd (遠東百貨) shares, the commission said.
Fuh Hwa bought 4.56 million shares last year, while Capital Investment Trust and Uni-President Assets bought 3.72 million shares and 3.95 million shares respectively, Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) told a news conference in Taipei.
The acquisitions breached the Securities Investment Trust and Consulting Act (證券投資信託及顧問法), as the firms were assigned by the bureau to conduct discretionary trading for the nation’s labor funds and they should make investment decisions based on their independent assessment, Tsai said.
“Asset management firms are banned from taking any cue from the staff of the Bureau of Labor Funds to make investment decisions,” Tsai said.
CREATING JUSTIFICATION
After accepting Yu’s order, Fuh Hwa Securities Investment vice president Chiu Ming-chiang (邱明強) and Uni-President Assets Management vice president Chueh Chih-chang (闕志昌) asked stock analysts Chen Chou-lun (陳周倫) and Yu Chien-yeh (俞建業) respectively to write reports in favor of Far Eastern’s shares, Tsai said.
Both reports lacked reasonable analyses, she added.
Capital Investment Trust vice president Hsieh Chih-ying (謝志英) made investments based on a report by analyst Tang Ming-chen (湯明真), which also favored the department store’s shares without any solid assessment, Tsai said.
An FSC investigation found that Uni-President Assets Management sold all of its Far Eastern shares three days after its last purchase, which indicated that the firm had not exercised sound evaluation in making investment decisions, she said.
SEEKING A REVIEW
The commission yesterday barred the three senior vice presidents from working in the industry over the next three years, she said.
It also demanded that the board of directors of Capital Investment Trust and Uni-President Assets review the qualification of the firms’ chairpersons and presidents, as firms had previously breached other regulations, she added.
The three stock analysts and four asset managers — Liu Chien-hsien (劉建賢), Sun Min-cheng (孫民承), Kuo Shih-ching (郭士慶) and Lin Rui-ying (林瑞英) — were suspended from one month to one year, the FSC said.
The fines are the severest the commission has imposed on asset management firms in a single case, it said.
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