Taiwan’s Financial Supervisory Commission has imposed a one-year ban on Cathay Securities Investment Trust (SITE), the asset management subsidiary of Cathay Financial Holding Co, from launching offshore securities investment trust funds. The restriction follows violations linked to a former SITE director’s failure to disclose an outside directorship, which breached conflict-of-interest regulations.

According to the regulator, the director did not provide required disclosures, and Cathay SITE also failed to maintain adequate records of interested parties and did not notify authorities promptly about significant events. The commission said the restrictions could be lifted if SITE addresses these compliance issues effectively. Additionally, a fine of six million Taiwan dollars (approximately US$188,834) was imposed on the asset manager.

In response to the ruling, Cathay SITE announced plans to review and strengthen its internal controls to prevent future breaches. Cathay Financial Holding Co, the parent company, issued an apology over the incident, which involved a former banking chairman’s external directorship and has raised questions about the group’s governance practices.

The incident reportedly escalated beyond regulatory violations, culminating in an alleged altercation involving a member of the Tsai family, Taiwan’s wealthy founders of Cathay. The compliance lapse prompted Cathay SITE to sell affected shares and restate the net asset values of impacted funds. This process led to investor compensation totaling around 944 million Taiwan dollars and losses associated with discretionary investment mandates.

The case highlights heightened regulatory scrutiny in Taiwan’s financial sector amid concerns about governance and transparency at major financial institutions.