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Investment firms should reform monitoring mechanisms: FSC

TAIPEI, Taiwan -- The Financial Supervisory Commission (FSC) yesterday called on investment firms to enhance their fraud prevention mechanisms and to re-establish market confidence after a recent high-profile insider trading scandal involving a government-invested firm.

The FSC yesterday held a conference with around 20 investment consultancy firms in light of recent scandals over fund manager insider trading, notably the “Ablerex Case” (盈正案) and the recent First Financial Holdings (第一金控) case.

The conference invited representatives from investment firms, including Securities Investment Trust and Consulting Association Chairman Henry Lin (林弘立), Yuanta Securities Investment Trust Co. (元大投信) President Liu Tsung-sheng (劉宗聖), Cathay SITC President Jeff Chang (張錫) and First Securities Investment Trust Co. (FSITC) Vice President Xue Shu-mei (薛淑梅), said the FSC.

Pushing Regulations

Xue said the FSITC is determined to take part in internal reforms of its financial regulation system, as part of winning investor confidence.

He said the company should put in place a higher level investment management committee to approve the investment decisions of individual fund managers. If any irregular investment behavior is discovered, the committee should immediately act, said Lin.

Local reports said Qiao Ren-jie (喬仁傑) and Hsu Xun-cheng (許訓誠), the two senior managers who are alleged to have manipulated Prescope Technologies' share price, and the former ING Securities Investment and Trust Co. (INGSITC, 安泰投信) Vice President Sam Hsieh (謝青良), allegedly involved with the “Ablerex Case” (盈正案), were previous Taipei Foundation of Finance (TFF)-Bloomberg Best Fund Award winners.

Tsai Zhi Ren (蔡志仁), former fund manager of Capital Trust Investment Corp. (群益投信), who is alleged to have conducted stock investment activities via dummy accounts that violated transaction rules, was awarded for his management of Capital Strategin Growth, winning a TFF-Bloomberg Best Fund Award (1 Year and 3 Year Stock Financial Solution).

Deputy director of the Securities and Futures Bureau, Wang Yung-hsin (王詠心) said the solution provided by the investment association tends toward internal control of investment decisions by individual company .

She said the Securities Bureau does not plan to introduce new financial regulations for individual companies. She hopes fund manger investment decisions will be approved by an internal assessment committee of more than two people. A firm should ensure the assessment body reviews any transaction before a fund manger finalizes their decision, said Wang.

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Deputy director of the Securities and Futures Bureau, Wang Yung-hsin (王詠心) answers questions after a conference with the Financial Supervisory Commission (FSC), yesterday. Wang said investment firms should form a core monitoring committee to oversee individual fund manager decisions and ensure compliance. (CNA)

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