Securities and Futures Bureau

Financial Supervisory Commission's disciplinary notice: Recipient: Original copy Date of issue: August 31, 2012 Issue number: Financial Management Securities No. 1120383959 Recipient: Cathay Securities Unified number of profit-making enterprises of a joint stock company: abbreviated address: abbreviated name of representative or manager: 〇〇〇 address: abbreviated Purpose: The person being punished violated the provisions of Article 2, Item 2 of the Securities Dealers Management Rules, in accordance with Article 66 of the Securities and Exchange Act Paragraph 1 of the Article stipulates that the person subject to punishment shall be given a warning and a fine of NT$1.5 million shall be imposed in accordance with Article 178-1, Paragraph 1, Paragraph 4 of the Securities and Exchange Act. Facts: The Taiwan Stock Exchange Co., Ltd. (hereinafter referred to as the Stock Exchange) conducted an inspection on the person subject to punishment and found that the person subject to punishment had not actually conducted parameter capacity testing of the certificate system connection mechanism, failed to actually perform application system stress testing, The Internet ordering service quality operation details do not include complete transaction security and stability specifications, the failure to establish standard operating procedures for certificate system failure recovery, and the certificate system database host does not have sufficient resource allocation, etc. It shows that the person being punished failed to implement the internal control system and violated Article 2, Item 2 of the Securities Dealers Management Rules. Reasons and legal basis: 1. According to "If a securities firm violates this Act or orders issued pursuant to this Act, in addition to being punished in accordance with this Act, the competent authority may, depending on the seriousness of the case, impose the following sanctions, and may order it to make improvements within a time limit: 1. Warning...", "If a securities firm... commits any of the following circumstances, the enterprise or association shall be fined not less than NT$300,000 but not more than NT$6 million, and may be ordered to make improvements within a time limit; if it fails to make improvements within the time limit, May be punished on a case-by-case basis: ...4. The securities firm...failed to implement the internal control system." This is stipulated in Article 66, paragraph 1, and Article 178-1, paragraph 1, paragraph 4 of the Securities and Exchange Act respectively; "The business of a securities firm Operations shall be conducted in accordance with laws, articles of association and the internal control system specified in the preceding paragraph." This is stipulated in Article 2, Item 2 of the Securities Dealers Management Rules. 2. When the stock exchange inspected the person subject to punishment, it found that the person subject to punishment had the following deficiencies: (1) The system parameters of the certificate system connection mechanism were not tested when the certificate system was launched, which violated the standards and specifications of the internal control system of securities firms. (Hereinafter referred to as Internal Control Standards and Specifications) CC-19000 System Development and Maintenance (13) Regulations. (2) Failure to actually perform application system stress testing operations, violating the internal control standards CC-17020 Computer System and Operation Safety Management (6). (3) The Internet order service quality operating rules do not include complete transaction security and stability specifications, which violates the internal control standards CC-17010 Network Security Management (8). (4) Failure to formulate standard operating procedures for voucher system failure recovery, implement them and keep records, violating the internal control standard CC-20000 Continuous Operation Management (2). (5) Failure to consider the resource sharing situation of the certificate virtual host, resulting in insufficient resource allocation for the certificate system database host, violating the internal control standards CC-17020 Computer System and Operation Security Management (5). 3. The deficiencies in the above opening are evidenced by letters from the stock exchange dated January 000, 2000 and January 000, 2000, and statements from the person being punished on January 000, 2000 and October 00, 2000, and have been verified. Violation of Article 2, Paragraph 2 of the Securities Dealers Management Rules shall be punished in accordance with Article 66, Paragraph 1 and Article 178-1, Paragraph 1, Paragraph 4 of the Securities and Exchange Act. 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: Cathay Securities Co., Ltd. (To be served: Mr. Zhuang 〇〇) Copies: Taiwan Stock Exchange Co., Ltd. (representative Mr. Lin 〇〇), Taiwan Securities OTC Trading Center of the Republic of China (representative Mr. Chen 〇〇), Securities Association of the Republic of China (representative: Mr. Chen 〇〇), Inspection Bureau of the Association, Securities and Futures Bureau of the Association (Accounting Office, Secretary’s Office, Securities Dealers Management Group)