In response to certain recent cases that have raised concerns among society, the FSC has sought to increase investor confidence in the asset management industry and to enhance supervision over relevant business operators. It therefore issued a letter requesting that the Securities Investment Trust and Consulting Association of the R.O.C. (SITCA) notify all investment trust companies to undertake inspections on their own of SITE fund managers and discretionary investment managers (including related parties). The object of the inspections was to discover whether violations had occurred involving trading in securities held by the funds managed by those persons or in assets under their discretionary management, and to carry out reviews of relevant business operators.

The results of the inspections and reviews showed, first, that minor violations had been committed by certain companies and personnel. Those will be subject to heavy penalties imposed by the companies themselves. In addition, four fund managers at four investment trust companies, including Capital Investment Trust Corp., Union Securities Investment Trust Co., Ltd., Mirae Asset Management Co., Ltd, and SinoPac Securities Investment Trust Co., Ltd., were found to have owned the same securities as those held by funds they manage or in assets under their discretionary management, and to have failed to file reports on the transactions with their own securities investment trust enterprise. The FSC imposed sanctions on those personnel based on the severity of the circumstances, including suspension from duties for periods of one month, three months, and one year, and dismissal from duties. The FSC also issued correction orders to Mirae Asset Management Co., Ltd. and SinoPac Securities Investment Trust Co., Ltd., a correction order and an administrative fine of NT$600,000 to Union Securities Investment Trust Co., Ltd., and a warning and an administrative fine of NT$1.2 million to Capital Investment Trust Corp. The latter company was additionally prohibited, within the following three months, from applying with the FSC to invest in foreign enterprises or establish new branch units, from applying within the following six months to conduct discretionary investment services or serve as a master agent of an offshore fund, and from conducting any offering or follow-up offering of securities investment trust funds for at least six months.

The inspection results showed that only a minority of personnel in the investment trust industry committed violations, and that most business operators and personnel exercise the due care of good-faith administrators while striving to enhance the efficiency of the funds that they manage or the assets under their discretionary management.

The SITCA has taken measures to strengthen the operational discipline of investment trust enterprises, increase general investor confidence in the investment trust industry, and avoid the occurrence of similar events. Those measures include reinforcing self-discipline and amending the Guidelines of the Securities Investment Trust and Consulting Association of the R.O.C. for Fund Management by Securities Investment Trust Enterprises. Related rules have been added, including requiring investment trust enterprises, when necessary, to inspect through the TWSE and the GTSM the securities transactions of its fund/discretionary investment managers and their spouses and minor children, and to adopt and faithfully implement rules governing the use of information and communications equipment at the offices of investment managers and fund managers.

In addition, to strengthen supervisory mechanisms over government funds managed by an outsourced institution, the FSC invited the Public Service Pension Fund Management Board, the Labor Pension Fund Supervisory Committee, and the Bureau of Labor Insurance to enter into discussions. They reached a consensus on strengthening information reporting mechanisms with respect to irregular transactions in government funds accounts under outsourced management and establishing information sharing mechanisms.

To increase the competitiveness of the asset management business, the FSC will implement measures to both revitalize the industry and to eliminate abuses, by continuing to promote measures related to profit making while also tightening discipline in investment trust enterprise operations, with the aim of maintaining investor confidence in the securities market and facilitating the sound development of investment trust enterprises.