Standard Chartered Plc and five Taiwanese banks were reprimanded by the island’s financial regulator for irregularities over the sale of securities issued by Private Equity Management Group Inc.
Hua Nan Commercial Bank, Bank SinoPac, Taichung Commercial Bank Co., Entie Commercial Bank and Cosmos Bank Taiwan will be suspended from some trust businesses, including the sale of structured products for six months, the Financial Supervisory Commission said in a statement on its website yesterday.
Taiwan investors lost more than $800 million from PEMGroup investments, the Taipei District Prosecutors’ Office said in a March 6 statement. Standard Chartered won’t be punished because the lender responded within two weeks after news broke that PEMGroup’s founder was being investigated by U.S. authorities, the regulator said.
“We respect the regulator’s decision,” Ruby Fu, a spokeswoman for London-based Standard Chartered, said by telephone today.
Danny Pang, founder of PEMGroup, died one year ago while free on $1 million bail. Pang was accused by the U.S. Securities and Exchange Commission of lying to Taiwanese investors about his credentials, forging insurance documents and paying existing investors with funds raised from new investors, while claiming the returns came from investments in life insurance policies.
Pang raised most of the funds from Taiwan, where he was born.
Entie Commercial Bank’s wealth management business may be impaired by the ruling, said Andrew Lee, the lender’s chief financial officer.
“The FSC decision means the bank can’t launch new products in the next six months, and this may have some impact on business development,” Lee said in an interview.
SinoPac Bank will improve its response procedures, said Ted Liao, a spokesman for SinoPac Financial, the lender’s parent company. The regulator’s decision isn’t expected to have any major impact on the banks affected, Liao said.