| Title： |
Guidelines for Securities Brokers in Reporting Default by Principals(2003.10.01) |
| Date： |
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5
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Procedures for revocation of default:
(1) When any of the following circumstances occur in a case of default, the securities broker shall be responsible for verification and shall revoke the default through a letter of report with evidentiary documents attached:
(i) Failure of the principal to make settlement payments within the stipulated time period resulting from negligence in banking operations.
(ii) Negligence by the broker in mistakenly reporting a principal's default.
(iii) Confirmation that the principal's default did not arise from an arbitration decision, a final judgment of the courts, or any other official document having the same effect as a final judgment.
(iv) Delay of settlement by an overseas Chinese or foreign national investor arising out of discrepancies in the times of holidays between two regions, interruption in telecommunications, or any other instance of force majeure.
(v) Circumstances conforming to the conditions of Article 91, Paragraph 3 of the Operating Rules of the Taiwan Stock Exchange Corporation.
(vi) When the principal, after occurrence of default, submits evidentiary documents showing that failure to complete timely settlement for the given discretionary account was due to the consignee's failure to perform responsibilities arising out of an unauthorized trade by the consignee.
(vii) Other reasons sufficient to demonstrate that the default was not attributable to the principal.
(2) When securities brokers report revocation of default and fail to perform complete verification of the grounds for revocation or to attach evidentiary documents as specified in the preceding paragraph, or when, upon examination, the attached documents and the reasons stated in the report do not appear to satisfy the formal requirements for proving that the default was not attributable to the fault of the principal, the TSEC will not accept or process such report; the securities broker reporting defaul
t shall bear full responsibility for any damage to the rights and interests of the principal or for any disputes arising from such a report.
(3) If the revocation of default reported by the securities broker contains any false or misleading statements, the TSEC may handle such event in accordance with the Article 38 of its articles of incorporation or Article 141 of the Operating Rules of the Taiwan Stock Exchange Corporation.
(4) A securities broker that mistakenly reports a default by a principal shall penalize the personnel responsible for the negligence by temporarily suspending their participation in operations for three months; that employee's registration certificate shall be returned with the letter of report revoking the default. The TSEC may handle such matters, according to circumstances, in accordance with Article 38 of its articles of incorporation or Article 140 of the Operating Rules of the Taiwan Stock Exchange
Corporation.
(5) When a securities broker has revoked a case of default and the TSEC has approved the revocation, the case shall be closed and filed for reference. If the facts of the case have already been reported to other securities brokers, the securities broker may receive and review the information on the revocation of the principal's default at 8:30 a.m. the next morning and submit it for display on the TSCE public announcement information system for that afternoon.
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