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Major Sanction

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Sanctions on Cathay Securities Investment Trust Co., Ltd. and Its Associated Person for Violation of Regulations


The Financial Supervisory Commission (hereinafter referred to as the FSC) has approved the sanctions on Cathay Securities Investment Trust Co., Ltd. (hereinafter referred to as the Cathay SITE) and its related personnel for violation of securities investment trust management laws and regulations.
The FSC found through inspection that the discretionary investment manager of Cathay SITE violated personal trading regulations during his tenure. The design and implementation of the company’s internal control system were not effective, and the business was not carried out with the duty of care and loyalty of a good manager, and not based on the principle of honesty and trustworthiness. These clearly affected the normal execution of its discretionary investment business.
The FSC has imposed the following administrative sanctions on Cathay SITE and its related personnel in accordance with the law based on the severity of the deficiencies:
I.     Date of sanction: April 18, 2024
II.     Object of sanction: Cathay SITE
III.     Legal basis for the sanctions, facts of violation and sanctions imposed:
(I)     Legal basis for the sanctions: Paragraph 1 of Article 7, paragraph 1 of Article 59, Article 69, paragraph 1 of Article 71, paragraph 1 of Article103, paragraph 7 of Article 111 of the Securities Investment Trust and Consulting Act, subparagraph 1, paragraph 2 of Article 13 and paragraph 5 of Article 14 with paragraph 2 applicable mutatis mutandis of the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust Enterprises, paragraph 2 of Article 2 of the     Regulations Governing Securities Investment Trust Enterprises, paragraph 2 of Article 6 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets, and Articles 19 and 19-1 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises.
(II)     Facts of violation: During his tenure as the discretionary investment manager of Cathay SITE, XX Wu, the former manager of the Discretionary Investment Account of Cathay SITE Authorized by Cathay Life Insurance (Taiwan Stock 9), used the information acquired on his job to trade the same stocks through other people’s accounts during the stock trading period of the discretionary investment accounts he managed, and did not declare to the company in accordance with regulations; in addition, the design and implementation of the internal control system of Cathay SITE were not effective and failed to effectively prevent conflicts of interest, and the company was unable to effectively supervise and audit the personal trading of managers. These have affected the company’s normal execution of discretionary investment business.
(III)     Sanctions imposed:
1.     On the company: A warning is issued to Cathay SITE in accordance with paragraph 1, Article103 of the Securities Investment Trust and Consulting Act, and a fine of NT$1,200,000 is imposed in accordance with paragraph 7, Article 111 of the same Act.
2.     On the personnel:     Cathay Site is ordered to release the responsibilities of XX Wu, its former discretionary investment manager in accordance with Article 104 of the Securities Investment Trust and Consulting Act.
In addition to the warning to Cathay SITE in accordance with paragraph 1, Article 103 of the Securities Investment Trust and Consulting Act, the company is restricted in the following related businesses:
I.       It is not allowed to apply (file) for the fund raising for securities investment trust funds investing in foreign securities in the next year, except for cases of which the violations have been specifically improved and recognized.
II.     It is not allowed to apply to serve as the general agent of overseas funds or concurrently operate the futures trust business in the next six months.
III.     It is not allowed to apply to the Financial Supervisory Commission for investment in foreign enterprises or establish branches, or invest in securities investment fund management companies in mainland China in the next three months.
IV.     Other matters: Other matters such as applying for the discretionary investment business of government funds will be affected.
The FSC has implemented regulatory measures such as prevention in advance, post transaction monitoring, and legal compliance advocacy for the prevention of conflicts of interest in SITE personnel’s transactions. In order to improve the development of the asset management industry and maintain market trading order, the FSC has referred to the supervision systems of various countries and added seven new and improved six conflict of interest prevention measures on February 20, 2024 to continuously improve the regulatory mechanism. The FSC will also continuously strengthen the internal control system of the SITE business, as well as the compliance awareness and behavioral discipline of practitioners, in order to ensure the implementation of corporate governance and the maintenance of the professional image of asset management.
The FSC reiterates that the SITE business is a highly-supervised chartered financial business that manages the assets of the public. Its business operations should be based on a culture of ethics and high-standard business conducts. Ethics is the top priority in the operation of the asset management business, which should fulfill the duty of good managers. Companies and individuals who violate the law will be severely punished to avoid the acts of few practitioners from affecting the trust of investors in the domestic asset management business.

Contact unit: Section Chief Chang, SITE and SICE Group, Securities and Futures Bureau
Tel: (02) 2774-7127
If you have any questions, please write to mail 


 
Visitor: 128   Update: 2024-04-29
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