FSC to toughen rules for local investment firms

  • By Kao Shih-ching / Staff Reporter

The Financial Supervisory Commission (FSC) plans to strengthen its oversight of local investment brokers to hold board members accountable if fund managers are involved in fraud or misconduct, the commission said on Thursday.

The FSC would stipulate in the Regulation Governing Responsible Persons and Associated Persons of Securities Investment Companies (證券投資信託事業負責人與業務人員管理規則) that board members are responsible for supervising the managers of funds, she said during a videoconference.

“Board members appoint fund managers, and the commission will ask companies to establish a responsibility system to improve their corporate governance,” said deputy general manager of the Securities and Futures Bureau Chang Tzy-ming. (張子敏) during the conference.

Photo: Chu Pei-hsiung, Taipei Times

If fund managers are found to be involved in misconduct, the commission will consider removing board members from their positions, Chang said, adding that the most severe sanction would be to remove the board member. operating license.

The FSC’s announcement follows reports in recent years that fund managers at local securities firms colluded with government officials in stock market speculation or illegally used inside information to trade personal stocks.

Knowing that the labor pension fund was to invest in certain specific stocks, some fund managers would have bought the stocks and sold them after the price rose, while other fund managers bought stocks knowing that their companies were going to invest in these, according to reports.

In one such case, two fund managers earned at least NT$80 million (US$2.56 million) between them, while another group including a pension fund manager earned won NT$538 million, according to Taipei District Court records.

In view of the increase in malpractice cases among fund managers, the FSC has increased the maximum fine for such activity to NT$15 million from NT$3 million.

The commission would ban people from serving on the boards of two or more securities investment firms to avoid conflicts of interest, Chang said.

However, this rule would not apply to state-owned securities firms, he said.

Although the FSC generally tightens the rules for fund managers, it would relax one rule, allowing them to manage the estate of their dependent children, she said.

It’s a reasonable activity, he says.

The changes to the regulations would go into effect in 60 days, Chang said.

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