Director resigns after fund violations trigger NT$454 million loss

Kuo Ming-chien, a director at Cathay Securities Investment Trust, has resigned from his position following a regulatory breach. The issue arose because Kuo also served as an independent director for the listed company WSMC (世芯-KY), a role that conflicted with regulations governing investment trusts.

Specifically, Kuo's dual role meant that eight funds managed by Cathay Securities Investment Trust held investments in WSMC, violating Article 10 of the "Regulations Governing Securities Investment Trust Funds." This article prohibits funds from investing in securities issued by companies with which their directors have a conflict of interest. The fund manager discovered this during a routine review, and the problematic holdings were fully divested by January 20.

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To protect the rights and interests of beneficiaries, we establish corporate governance mechanisms with the highest standards to fulfill our corporate social responsibility, and at the same time respect the wishes of the individual.

The violation necessitated a recalculation of the net asset values for the affected eight funds over a specific period. This recalculation resulted in investment losses exceeding NT$454 million (approximately $14 million USD). Cathay Securities Investment Trust announced that it will absorb these costs and compensate the investors. The company stated that it adheres to the highest standards of corporate governance and social responsibility. Affected investors will be notified starting tomorrow, with compensation payments scheduled for June 29.

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Cathay Securities Investment Trust will adhere to the aforementioned principles and adopt a preferential approach to this matter.