TAIPEI: Cathay Securities Investment Trust (SITE), the asset-management arm of Taiwan’s largest financial conglomerate, is barred from applying to launch offshore securities investment trust funds for one year, after a former director’s outside role breached conflict-of-interest rules.
A former Cathay SITE director failed to report required disclosures, the Financial Supervisory Commission said in a statement, adding that the arm also neglected to maintain records of interested parties and to notify regulators of material events in a timely manner. The restrictions will not apply if the violations are concretely remedied, the regulator said, also fining the asset manager six million Taiwan dollars (US$188,834).
Following the financial regulator’s decision, Cathay SITE said that it will review and enhance its internal control mechanisms to strengthen its operations.
Cathay Financial Holding Co, parent of Cathay SITE, has apologised over a former banking chairman’s outside directorship that triggered a regulatory breach at its asset-management subsidiary, putting the group’s governance under scrutiny.
The episode even escalated into an alleged assault involving a member of Taiwan’s billionaire Tsai family, which founded Cathay. The compliance breach forced the asset manager to sell shares and restate the net asset values of affected funds, resulting in about 944 million Taiwan dollars in investor compensation and losses on discretionary investment mandates. — Bloomberg
