The Financial Supervisory Commission (hereinafter referred to as the FSC) approved the sanctions against Cathay Securities Investment Trust Co., Ltd. (hereinafter referred to as Cathay SITE) and its employee for violating securities investment trust management related regulations.
After its investigation, the FSC found that a fund 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 company did not fulfill the duty of care and loyalty of a good manager and the principle of honesty and trustworthiness; these clearly affected the normal operation of its fund business.
The FSC imposes administrative sanctions on the SITE and its employee as follows in accordance with the severity of the deficiencies:
1.     Date of sanction: January 14, 2025
2.     Object of sanction: Cathay SITE
3.     Legal basis for the sanction, facts of violation, and sanctions imposed:
(1)     Legal basis for the sanction: Paragraph 1, Article 7, Article 69, Article 77, paragraph 1, Article 103, and paragraph 7, Article 111 of the Securities Investment Trust and Consulting Act; subparagraph 1, paragraph 2, Article 13, and paragraphs 1 and 2, Article 14 of the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust Enterprises; paragraph 2, Article 2 of the Regulations Governing Securities Investment Trust Enterprises; and paragraph 2, Article 6 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets.
(2)     Facts of violation: During his tenure at Cathay SITE, XX Li, former fund manager of Cathay XX Fund, leaked information known in his official capacity to others, and used someone else’s account to trade the same stocks during the trading period of the fund account without reporting to the company in accordance with regulations. In addition, the design and implementation of the internal control system of Cathay SITE were ineffective and failed to effectively prevent conflicts of interest, and failed to effectively supervise and audit the personal trading of the company’s managers; furthermore, no verification was conducted afterwards. These have affected the normal execution of the company’s fund business.
(3)     Sanctions imposed:
1.     On the company part: A warning is issued to Cathay SITE according to paragraph 1, Article 103 of the Securities Investment Trust and Consulting Act, and a fine of NT$1.2 million is imposed in accordance with paragraph 7, Article 111 of the same Act.
2.     On the employee part:     Cathay SITE is ordered to release its former fund manager XX Li from his position in accordance with Article 104 of the Securities Investment Trust and Consulting Act.
A warning is issued to Cathay SITE according to paragraph 1, Article 103 of the Securities Investment Trust and Consulting Act, and its related businesses are subject to the following restrictions:
1.     Within the next 12 months, the company is not allowed to apply (file) for securities investment trust fund cases to raise funds to invest in foreign securities, but this restriction shall not apply if the illegal activities have been specifically improved and recognized.
2.     Within the next six months, the company is not allowed to apply to serve as the general agent of overseas funds or concurrently operate the futures trust business.
3.     Within the next three months, the company is not allowed to apply with the FSC to invest in foreign enterprises or establish branch offices, or to invest in securities investment fund management companies in mainland China.
4.     Other matters: The company’s application for the discretionary investment business of government funds will be affected.
The FSC reiterates that the SITE business is for the management of the assets of the public, and is a highly supervised chartered financial business of which the operations should be based on a corporate culture of ethics and a high standard of business conduct. Ethics is the top priority in the operation of the asset management business, and practitioners should fulfill the duty of care of a good manager. Companies and individuals who violate the law will be severely punished to avoid the misconduct of a few practitioners from affecting investors’ trust in the domestic asset management business.

Contact unit: Section Chief Chang, Securities Investment Trust and Consulting Division, Securities and Futures Bureau
Tel: 02- 2774- 7127
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