Securities and Futures Bureau

Financial Regulatory Commission Sanctioning Person Recipient: Original copy Date of Issuance: October 25, 2012 Issuance Number: Financial Management Securities Penalty No. 1120338098 Person Punished: SinoPac Securities Co., Ltd. Unified Number of Profit-seeking Enterprises: Address: Name of representative or manager: ○○○ Address: Purpose: In accordance with the provisions of Article 178-1, Paragraph 1, Paragraph 4 of the Securities and Exchange Act at the time of the act, the person being punished shall be fined NT$240,000. Facts: The Inspection Bureau of this Commission conducted an inspection on the financial holding group's reinvestment management project of Sino-Fung Financial Holdings Co., Ltd. (hereinafter referred to as Sino-Fung Financial Holdings) and found that the subsidiary of the person being punished, Sino-Feng Securities Venture Capital Co., Ltd. ( The rating classification of investment targets and the reasons for adjustment of classification by SinoPac Venture Capital Co., Ltd. (hereinafter referred to as SinoPac) are not stated in the management quarterly report; the latest financial information of comparable companies in the same industry is not used for evaluation of investment targets; the selection of comparable companies is There is no consistency or the liquidity discount is inconsistent, and the reason and impact of the change are not explained; the evaluation operation uses companies with higher comparative values ​​as multipliers for evaluation; for the multipliers of comparable companies, the definition and treatment of extreme values ​​are not standardized , affecting the objectivity of the evaluation and other deficiencies, showing that the person being punished failed to urge SinoPac Venture Capital Company to implement the internal control system of the investment target, and violated the provisions of Article 2, Item 2 of the Securities Dealers Management Rules. Reasons and legal basis: 1. According to Article 2, Paragraph 2 of the Securities Dealers Management Rules, the business of a securities firm shall be conducted in accordance with laws, articles of association, and the internal control system specified in the preceding paragraph. In addition, according to Article 178-1, Paragraph 1, Paragraph 4 of the Securities and Exchange Act at the time of the act, a securities firm that fails to implement an internal control system shall be fined not less than NT$240,000 but not more than NT$4.8 million. 2. From July 22 to August 3, 2011, the Inspection Bureau of this Commission conducted an inspection on the financial holding group’s transfer investment business management project of Sino-Feng Financial Holding Company and found that Sino-Feng Securities Venture Capital Co., Ltd., a subsidiary of the person subject to punishment, had the following Missing circumstances: (1) SinoPac Venture Capital Company has not listed investment targets that have suffered losses for three consecutive years as Category 2 continuous tracking cases in accordance with its internal regulations, and the investment targets have been adjusted from Category 1 to Category 2 and subsequently. When the company was transferred back to the first category, the reasons for adjusting the classification were not explained, and it was found to have violated the standard specifications for the internal control system of securities firms (hereinafter referred to as the internal control standard specifications) CM-19100 "Supervision of subsidiaries" (2) 4. The relevant company's supervision of subsidiaries The supervision and management of operations and management should at least include the following control operations: The company should formulate regulations on policies and procedures for supervising and managing the securities investments of each subsidiary. (2) When handling the evaluation of unlisted OTC stocks, the latest financial information of comparable companies in the same industry was not used for evaluation in accordance with internal regulations; the selection of comparable companies was not consistent or the liquidity discount was inconsistent, but the reason and impact of the change were not explained ; The evaluation operation uses companies with higher stock price-to-book ratio (P/B) and price-to-earnings ratio (P/E) as multipliers for evaluation, instead of taking the middle value of the evaluation range as the estimated fair value in accordance with internal regulations; in addition, for The multipliers of comparable companies did not standardize the definition and handling of extreme values, which affected the objectivity of the evaluation, etc., and violated the provisions of the Internal Control Standards CM-19100 "Supervision of Subsidiaries" (2) 4. 3. The above-mentioned deficiencies show that the person being punished failed to urge the subsidiary to implement the internal control system in accordance with its internal regulations, which violated the provisions of Article 2, Paragraph 2 of the Securities Dealers Management Rules, and was in compliance with Article 178-1 of the Securities and Exchange Act. Paragraph 1, paragraph 4, stipulates that the punishment shall be as intended. Payment method: 1. Payment deadline: Pay within 10 days from the day after this sanction is served. 2. Please make payment according to the precautions on the payment slip attached to the (agency). Notes: 1. If the person subject to punishment is dissatisfied with this punishment, he shall file a petition through this Association (Banqiao District, New Taipei City) in accordance with the provisions of Article 58, Paragraph 1 of the Petition Law within 30 days from the day after the punishment is served. 18th Floor, No. 7, Section 2, Xianmin Avenue) filed a petition with the Executive Yuan. However, according to Article 93, Paragraph 1 of the Petition Act, unless otherwise provided by law, the filing of an appeal does not stop the execution of this sanction, and the person subject to the sanction shall still pay the fine. 2. If the person subject to punishment fails to pay the fine within the payment period specified in this punishment, the person shall be transferred to any branch of the Administrative Enforcement Agency of the Ministry of Justice for administrative enforcement in accordance with the proviso of Article 4, Paragraph 1 of the Administrative Enforcement Act. Original: SinoPac Securities Co., Ltd. (representative: Mr. ○○○) Copy: Taiwan Stock Exchange Co., Ltd. (representative: Mr. ○○○), Securities OTC Trading Center of the Republic of China (representative: Mr. ○○○) ), Securities Business Association of the Republic of China (representative Mr. ○○○), Financial Supervisory Commission Inspection Bureau, Securities and Futures Bureau (Accounting Office), Securities and Futures Bureau (Secretary Office), Securities and Futures Bureau (Securities Dealers Management Group)