Two Taiwanese fund managers suspected of making personal fund investments after being entrusted to handle the investments of labor pension funds were indicted by the Special Investigation Division (SID)

SID indicts fund managers on insider trading, costing government NT$3.8 billion

By Katherine Wei,The China Post
October 17, 2013, 12:03 am TWN

TAIPEI, Taiwan — Two fund managers suspected of making personal fund investments after being entrusted to handle the investments of labor pension funds were indicted by the Special Investigation Division (SID) yesterday. Former JihSun Funds (日盛投信) manager Chen Ping (陳平) and former Yuanta Funds (元大寶來投信) manager Chu Nai-cheng (瞿乃正) were accused of buying stocks under the names of relatives, friends and employees when they were responsible for investing in the nation’s labor pension funds. After Chen and Chu secured a large amount of stocks in the market, they introduced the pension funds and sold their private stocks when the prices rocketed, allegedly benefiting enormously from the procedure.According to the SID, the two men had charted a false analysis of their stock investments which included inaccurate information. Chen received over NT$56 million and Chu earned over NT$14 million, at a total cost to the government of NT$3.8 billion.

The SID asked the court to hand out heavy sentences to both men, and called for larger fines as well. “Their acts are despicable,” said the SID official in charge.

Investigators discovered that Chen and Chu applied for loans in order to buy more shares; their habit of buying stocks even during periods of rising share prices — highly unusual in the market as investors tend to buy after stock prices drop — also registered as suspicious.

Both Chen and Chu admitted to having made fund investments under the names of many other individuals, but denied involvement in insider trading. The men also claimed that the stocks included in the analysis had been chosen by their companies during firm conferences, and that they had no part in the decisions.

The Executive Yuan’s Labor Pension Fund Supervisory Committee announced that it will take remedial actions upon receiving notification from the SID, and will demand full compensation by the accused fund managers.

The SID has confiscated NT$300,000 in cash, NT$28 million in stocks and bank savings from Chen, NT$6.93 million in cash and a house from Chu.

A total of 52 people were subpoenaed for the case, with the bill of indictment adding up to a massive 507 pages, said the responsible prosecutors.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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