1.Date the fine was imposed: September 17, 2020

2.Recipient of the fine: Yuanta Securities Investment Trust Co., Ltd. (hereinafter " Yuanta ")

3.Legal basis of the fine: Article 6, paragraph 1 of Regulations Governing Futures Trust Enterprises. Article 54, paragraph 1 of Regulations Governing Futures Trust Funds. Article 4, paragraph 1, subparagraph 3, Article 6, paragraph 2, and Article 33 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets.

4.Facts of the violation and reasons:

(1)Yuanta did not ensure sustained design and operating effectiveness of the internal control system. There is no documentation and preservation of authorized records or pre-stipulated hierarchical responsibility checklist when Yuanta adjusted its investment strategy in accordance with the special circumstances stipulated in the futures trust contracts in managing the futures trust funds.

(2)Yuanta did not ensure sustained design and operating effectiveness of the internal control system and internal check principle. When the responsible executive asks for leave or takes a business trip, he/she has been approved by the agent of other non-responsible executive and without submitting the approval of the higher level supervisor. The investment analysis report, the decision letter, and the review report Yuanta have not been submitted for the approval of the higher level supervisor, either. 

(3)Yuanta did not ensure sustained design and operating effectiveness of the internal control system. There is no public announcements of Yuanta within the required time in accordance with the "Procedures for Verification and Disclosure of Material Information of Trust Enterprises with TWSE Listed Beneficial Certificates and Offshore Fund Institutions.", nor the stipulated public announcement procedures in internal control system.

(4)The investment analysis reports were not written by Yuanta  basing on reasonable foundations and the review reports were not mentioned the strategy adjusted in accordance with the special circumstances. Yuanta executed analysis and review procedures with a mere formality.

5.Resulting fine: 

(1)An administrative fine of NT$600,000 was imposed on Yuanta pursuant to Article 119, paragraph 1, subparagraph 2 of the Futures Trading Act.

(2)In accordance with Article 33 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in the Securities and Futures Markets, the FSC orders Yuanta to make improvements within a prescribed time limit and appoint non-engagement CPAs to conduct a special audit of its internal control system and obtain an audit report.

 

According to the Article 17, subparagraph 8 of the Regulations Governing Futures Trust Funds, the FSC may reject or not approve engaging in any activity to offer a futures trust fund if Yuanta failure to correct a deficiency of the internal control systems or obtain the audit report of operating internal control effectiveness.