Financial Supervisory Commission Award

 

Recipients:

Issuing date: April 21, 2020

Issuing number: Jin-Guan-Cheng-Tou-Fa No. 1090361849

 

Objects of disciplinary action: Capital Investment Trust Corporation

Unified number of profit-seeking enterprises: omitted

Address: omitted

Representative name: XX Lai

Address: omitted

 

Objects of disciplinary action: XX Huang

ID number: omitted

Address: omitted

 

Subject: A warning is issued to and a fine of NT$1.2 million is imposed on Capital Investment Trust Corporation (hereinafter referred to as Capital Investment Trust), and Capital Investment Trust is ordered to dismiss its former fund manager XX Huang from his duties. 

 

Facts and Reasons:

1. Paragraphs 1 and 2 of Article 77, paragraph 1 of Article 103, Article 104 and paragraph 7 of Article 111 of the Securities Investment Trust and Consulting Act respectively stipulate that: “from the time that the securities investment trust enterprise decides to utilize the securities investment trust fund to engage in any type of corporate stock or equity derivative trade until such time as the securities investment trust fund no longer holds that corporate stock or equity derivative, no …. fund manager …. himself or herself or his or her spouse, minor child or other person in whose name he or she transacts, may engage in trading such corporate stock or equity derivative,” “a … fund manager…. of a securities investment trust enterprise who engages in trading of any corporate stock or equity derivative shall report the circumstances of the trade to the securities investment trust enterprise as provided by the competent authority,” “where a securities investment trust enterprise or securities investment consulting enterprise has violated this Act or any order issued hereunder, in addition to imposing other penalties pursuant to this Act, the competent authority may, depending on the severity of the offense, impose any of the following dispositions: 1. a warning .…,” and “where an .… employee of a securities investment trust enterprise …. does anything in the course of executing the duties that violates this Act or other applicable acts or regulations, where sufficient to affect the normal execution of business, the competent authority may …. dismiss such person from their position ….” and “for any of the following offenses, a securities investment trust enterprise …. shall be fined an administrative fine of not less than NT$600,000 …. 7. violating applicable codes of conduct or restrictive or prohibitory provisions of the regulations prescribed by the Competent Authority under Article 69.” In addition, sub-paragraph 1, paragraph 2 of Article 13 and paragraphs 1 and 2 of Article 14 of the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust Enterprises (hereinafter referred to as Regulations Governing SITE Personnel) respectively stipulate that: “unless otherwise provided by an act or regulation, a person referred to in the preceding paragraph may not engage in any of the following conduct: 1. divulging information learned on the job to any other person, or using such information for trading in securities or securities-related products” and “unless otherwise provided by an act or regulation, from the time that a SITE decides to utilize a securities investment trust fund to trade in a certain corporate stock or equity derivative until such time as the securities investment trust fund no longer holds that corporate stock or equity derivative, no …. fund manager of the SITE, or any of such person''s spouse, minor child, or other person in whose name that person transacts, may trade in such corporate stock or equity derivative” and “a …. fund manager of a SITE shall report to the employing SITE on the circumstances in which, and if such a person or any related party thereof has traded in corporate stocks or equity derivatives.” 

2. The facts of violation of the Securities Investment Trust and Consulting Act by XX Huang (hereinafter referred to as Huang) are as follows:

(1) Huang was the manager of Capital High Tech Fund from April 1, 2018 to August 19, 2019. He used the company''s wireless network and other accounts to buy the same stocks as those of the fund he managed for his father, himself and his relatives and friends through the accounts of his friends XX Lin, XX Liang and XX Huang, and bought the stocks before Capital XX Fund, and then engaged in same-day or following-day wash sale after Capital XX Fund bought the stocks on the same day or sold the stocks on the next day to earn the price difference. 

It is obvious that he used the information obtained from his position to engage in the trading of securities and the trading of the same securities held by the fund under its management, and failed to make a declaration to the company to which it belongs. Huang acknowledged in writing on September 11, 2019 that the account of XX Liang was used by Huang for his own trading, and the accounts of XX Lin and XX Huang were used to trade securities on behalf of his father and relatives and friends. It was verified that these acts have violated the provisions of paragraphs 1 and 2 of Article 77 of the Act, and sub-paragraph 1, paragraph 2 of Article 13 and paragraphs 1 and 2 of Article 14 of the Regulations Governing SITE Personnel.

(2) Capital Investment Trust did not effectively manage its network security, thus enabling XX Huang to use the company’s wireless network during work to trade stocks for the interests of himself or others. In addition, during his tenure as a fund manager, Huang used the securities accounts of others to trade the same stocks as those of the funds under his management; the transaction amount was huge but was not declared according to the regulation, and Capital Investment Trust failed to fulfill its responsibility of supervision; it was verified that it was the missing of Capital Investment Trust. 

3. In light of the above-mentioned facts, the law violation by Capital Investment Trust and its former employee Huang has affected the normal execution of the securities investment trust business. Therefore, the disciplinary action as in the Subject is imposed in accordance with paragraph 1 of Article 103, Article 104 and paragraph 7 of Article 111 of the Act.

 

Legal Basis:

1. Paragraphs 1 and 2 of Article 77, paragraph 1 of Article 103, Article 104 and paragraph 7 of Article 111 of the Securities Investment Trust and Consulting Act.

2. Sub-paragraph 1, paragraph 2 of Article 13 and paragraphs 1 and 2 of Article 14 of the Regulations Governing SITE Personnel.

 

Method of Payment:

1. Payment period: within 10 days from the next day of delivery of the disciplinary action notice.

2. Please make the payment in accordance with the notes to the payment slip attached by the Securities and Futures Bureau of FSC.

3. Contact person: Miss Chen, tel: (02)27747392, fax: (02)87734134.

 

Notes:

1. If the penalized party refuses to accept the disciplinary action, it shall, within 30 days after the delivery of the disciplinary action notice, file a petition via a petition letter to the Executive Yuan via the FSC (address: 18F, No. 7, Section 2, Xianmin Avenue, Banqiao District, New Taipei City) in accordance with paragraph 1, Article 58 of the Administrative Appeal Act. However, in accordance with paragraph 1, Article 93 of the Administrative Appeal Act, unless otherwise provided by law, the filing of the petition does not stop the enforcement of this disciplinary action, and the penalized party shall still be liable for a fine.

2. If the penalized party fails to pay the fine within the time limit set for payment, the case will be transferred to the applicable branch of the Administrative Execution Department of the Ministry of Justice for administrative execution in accordance with the proviso to paragraph 1, Article 4 of the Administrative Execution Act.

 

Original: Capital Investment Trust Corporation [recipient: Mr. XX Lai, Representative] (omitted) [please send by double registered mail], XX Huang (omitted)

Copies:  Securities Investment Trust and Consulting Association of the ROC (Mr. Hsi Chang, Representative), Securities and Futures Bureau of the Financial Supervisory Commission (Controller’s Office, Secretary Office, SITE and SICE Group)

Transcript:

 

Chairman　XX Gu