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6
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Handling of violations:
(1) Given the occurrence of any of the circumstances listed below in reporting on account errors or correction of account numbers by the headquarters or an individual branch office of a securities broker, the TSE, pursuant to Article 135 of the Operating Rules of the Taiwan Stock Exchange Corporation, will notify the securities broker to improve its practices:
(i) Failure by a broker to enter information within the prescribed time period on account errors, correction of account numbers, or handling of errors by repurchase or resale through the error account, except for reasonable cause and with the approval of the TSE.
(ii) Failure by a broker to handle an error through repurchase or resale of securities within the prescribed period of time, except for reasonable cause and with the approval of the TSE.
(iii) When, in reporting on corrections to account numbers for a given month, correction of the same account number results in different account numbers two or more times, or corrections of different account errors result in the same subsequent account number two or more times, except for reasonable cause and with the approval of the TSE.
(iv) Failure to report or handle a case in accordance with Article 2, paragraphs 3 or 4.
(v) Reporting of more than ten errors on a given day that are not attributable to correction of account numbers by investors.
(vi) When, in a given month, the total number of errors on consignments reported and not attributable to correction of account numbers by investors exceeds 1/1000th of the total number of confirmed transactions, when that proportion also exceeds the average totals for errors reported by all securities brokers that are not attributable to correction of account numbers by investors.
(vii) When there are four or more written reports for a given month.
(viii) When, on a given day, the total number of errors reported that are not attributable to correction of account numbers by investors equals or exceeds NT$40 million or total shares of 400,000 shares (in beneficiary units).
(2) When in a given year a securities broker has failed to improve its practices following notification by the TSEC in accordance with Article 6, Paragraph 1, the TSEC may issue a warning and handle the matter in accordance with Article 136 of the Operating Rules of the Taiwan Stock Exchange Corporation.
(3) When, on a given day, the total number of errors reported by the headquarters or an individual branch of a securities broker for a single type of stock equals or exceeds NT$50 million, and where such errors are not attributable to correction of account numbers by investors, the TSEC will notify the securities broker to supervise the performance of the negligent sales personnel, and will also impose a penalty of NT$20,000. For each instance in which errors exceed a total amount of NT$10 million, an additional penalty of T$10,000 will be imposed, with an upper limit of NT$100,000 for total fines imposed.
The fines referred to in the preceding subparagraph shall be paid by the securities firm to the finance department of the TSEC within two days after receiving notice from the TSEC.
In handling the penalties referred to in the preceding two subparagraphs, the TSEC may apply mutatis mutandis the following provisions of the Operating Rules of the Taiwan Stock Exchange Corporation: Article 138, Paragraph 1; Article 139, Paragraph 1, Subparagraphs 4 and 5; and Article 145.
(4) When any of the following circumstances occur in reporting of account errors or correction of account numbers by a securities broker, the TSEC, pursuant to Article 144 of the Operating Rules of the Taiwan Stock Exchange Corporation, will notify the securities broker to handle the matter by issuing a warning to the negligent sales or managerial personnel or by temporarily suspending their participation in operations:
(i) When there are written reports of errors on a given day attributable to the negligence of one particular sales employee for one type of stock, with a total amount of corrections equal to or exceeding NT$50 million, the broker will be notified to issue a warning to the negligent sales personnel.
(ii) When, in a given month, there are two or more instances of negligence by the given sales employee as set forth in the preceding paragraph, the TSEC will notify the securities broker to suspend that employee from operations for a period of one month, and to issue a warning to the operations manager for that respective department or to the head of the consignment trading department of the branch office concerned.
(5) Any false or misleading statement made by a securities broker in connection with reporting of account errors or correction of account numbers may be handled by the TSEC by applying, mutatis mutandis, Articles 141 and 145 of the Operating Rules of the Taiwan Stock Exchange Corporation.
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