The Financial Supervisory Commission (FSC) plans to tighten its oversight over local investment brokerages to hold company board members accountable if fund managers are found to be involved in fraud or malpractice, the commission said on Thursday.
The FSC would stipulate in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust Enterprises (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 fund managers, it told a news videoconference.
“Board members appoint fund managers and the commission will ask companies to establish an accountability system to enhance their corporate governance,” Securities and Futures Bureau Deputy Director-General Chang Tzy-ming (張子敏) told the conference.
Photo: Chu Pei-hsiung, Taipei Times
If fund managers are found to be involved in malpractice, the commission would consider dismissing the board members from their posts, Chang said, adding that the severest punishment would be to revoke operating permission.
The FSC’s announcement follows reports in the past few years of fund managers at local securities investment companies found to have either colluded with government officials in stocks speculation or to have illegally used insider information to trade personal stocks.
Knowing that the Labor Pension Fund was to invest in some specific stocks, some fund managers allegedly purchased the shares and sold them after the price rose, while other fund managers bought shares with knowledge that their companies were to invest in them, reports said.
In one such case, two fund managers made at least NT$80 million (US$2.56 million) between them, while another group that included an official in charge of a pension fund made NT$538 million, Taipei District Court records show.
Given the rise in malpractice cases among fund managers, the FSC increased the maximum fine for such activity to NT$15 million from NT$3 million.
The commission would bar people from serving on the boards of two or more securities investment companies to prevent conflicts of interests, Chang said.
However, this rule would not apply to state-owned securities firms, he said.
Although the FSC is generally tightening rules for fund managers, it would relax one rule, allowing them to manage the wealth of their dependent children, it said.
This is a reasonable activity, it said.
The changes to the regulations would take effect in 60 days, Chang said.
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