Cathay Securities Investment Trust, a unit of Cathay Financial Holdings Co (TPE:2882), has been fined NT$6 million by Taiwan's Financial Supervisory Commission (FSC) over severe internal control failures, according to an official statement by the commission on Tuesday.
Cathay Financial's shares were down nearly 2% in Wednesday's trade.
The commission has also banned the investment firm from launching overseas funds or ETFs for one year. It has also prohibited the company from applying to serve as a master agent for offshore funds or to concurrently operate futures trust business for six months.
The FSC also restricted the company from applying to invest in foreign enterprises, establish branches, or acquire equity stakes in securities investment fund management companies in mainland China for three months.
The fines and restrictions came as a former director of the company failed to declare related-party information, leading to illegal investments by its funds and discretionary accounts in shares of a related-party company that resulted in significant losses.
In this regard, the regulator fined Cathay Securities NT$3 million for the mutual-fund investment violation and NT$3 million for the discretionary investment account violation.