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May 27, 2017

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Gov't pension funds lose over NT$150 mil. on rogue trades

Government pension funds have lost more than NT$150 million in recent stock investments handled by rogue traders, a legislator revealed yesterday.

Legislator Tsai Chi-chang said that the pension funds bought shares of Ablerex Electronics separately through ING Funds and Allianz Global Investors in September 2010, and then lost 33 percent, or some NT$154.34 million in total, in just over a month.

Tsai said the losses mainly resulted due to a single ING fund manager, surnamed Hsieh, who allegedly bought large amounts of Ablerex shares from the over-the-counter market through a dummy account, and then resold them at high prices to his government clients.

The manager has been fired by ING, which has also promised to compensate the government funds, according to the United Evening News.

But the newspaper said ING has only returned NT$12 million so far, and is willing to cover only the losses attributable to Hsieh, but not all losses. The company and the pension funds are still negotiating for a settlement, the paper added.

The Financial Supervisory Commission (FSC) confirmed that there has been a violation of rules by investment trust firms, and punishments have been meted out. But the FSC declined to disclose details.

The United Evening News said the FSC has already had the manager relieved from his post and issued a warning to ING. One government pension fund has also blacklisted ING, banning it from operating its investments for five years, the paper added.

Legislator Tsai said the government funds had not disclosed the case, and he urged the Council of Labor Affairs to openly identify rogue traders.

Any fund manager who has incurred losses of more than 20 percent for government investments must also be publicly named, which will put pressure on investment trust firms and their fund managers, Tsai said.

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