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Commercial Times: Regulate private placement programs properly
2010/07/30 13:16:23 |
The Financial Supervisory Commission (FSC) is reviewing the propriety of private placement programs employed by banks and financial holding companies to raise funds, and the investment by private placement funds into local companies, with an eye to tightening up the regulations governing such programs.
Without the fanfare that has accompanied the financial reforms undertaken by the U.S. and European states, the move by the commission is significant anyway because it is a vital part of the government's efforts to improve the country's financial system.
The advantages of private placement programs are that they can raise much-needed funds quickly for healthy companies and also help unhealthy companies to recover by introducing new investors who can address their problems.
But the downside is that they provide the major owners of a company with a means of transferring undue profits to specific individuals through the programs at the cost of the company's smaller owners.
Taiwan is set to enter a period of prosperity in the wake of its conclusion of a trade pact with China, but as Charles Kindleberger warned in his book titled "Manias, Panics and Crashes, " along with economic prosperity comes the possibility of financial crisis -- the more prosperous the economy, the more likely a crisis will occur.
Supervising the private placement mechanism is sure to help with the country's financial stability. (Abstract of Commercial Times editorial, July 30, 2010) (By Maubo Chang) ENDITEM/J
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