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Unlawful labour fund management suspected in Taiwan

Publication Date : 19-07-2014


Fund managers of several Taiwanese financial institutions in charge of the nation's labour retirement and pension funds are suspected of manipulating stock prices for private gain, while contributing to more than NT$60 million in loss to the funds.

It was reported in local media that fund managers of First Financial Holding, Shin Kong Financial Holding and Yuanta Financialwere charged to manage a total of eight labor retirement and pension funds. The managers were involved in causing the rise in the share prices of Gia Tzoong, Unic Technology and All Ring Tech before selling them to pocket NT$120 million (US$4 million), according to prosecutors.

The Labour Pension Fund Supervisory Committee chairperson Huang Chao-hsi said the committee would certainly seek full compensation if any loss incurred was indeed the result of inappropriate fund management.

None of the suspected three financial institutions are currently in charge of the government's labour retirement and pension funds. If found guilty, they will be banned from managing these funds, Huang said.

In fact, a similar scandal happened in 2011, when ING Securities Investment and Trust Co. was involved in hiking up share prices, resulting in a loss totaling NT$170 million (US$5.66 million) in labour pension and retirement funds. ING shouldered all the loss and was banned from the fund's management for five years.

Since then, both Labour Pension Fund Supervisory Committee and the Financial Supervisory Commission (FSC) have implemented closer monitoring of institutional investors, Huang said, adding that both the Labour Retirement Fund and the Labour Pension Funds have seen good performance this year, profiting over NT$100 billion (US$3.33 billion) in total as of June this year.

FSC Chairman Tseng Ming-chung also prescribed three measures in response to the latest scandal. First, the FSC will beef up internal audits and related regulations against those jeopardising investor interests, while supporting prosecutors' investigation. Second, it will promptly carry out punishment for parties found guilty in the investigation. Third, the FSC will order institutional investors to hand out an improvement plan to ensure progress in the investment industry.


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