On this day, the Financial Supervisory Service Sanctions Deliberation Committee proposed measures for sector inspections for Woori Bank, Shinhan Bank and Shinhan Financial Group. The sanctions review was applied to Woori Bank first, followed by Shinhan Bank and Shinhan Finance.
The Financial Supervisory Service notified in advance of a’job suspension’ (significantly) to Chairman Son Tae-seung, who was the head of Woori Bank at the time of the sale of the Lime Fund, and a’cause warning’ to Chief Executive Jin Ok-dong. All are severe disciplinary actions that limit employment in financial companies for 3 to 5 years. Shinhan Financial Group Chairman Cho Yong-byeong was notified in advance of a’cautionary warning’, a disciplinary measure.
The sanctions trial is conducted in a large-sector system. Financial Supervisory Service inspection department employees, financial institutions subject to sanctions and legal representatives all attend to answer questions from the sanctions judges.
Woori Bank’s Lime Fund sales amounted to 357.7 billion won, the highest among 19 sales companies. Shinhan Bank’s sales amounted to 276.9 billion won, the third following Woori Bank and Shinhan Financial Investment (324.8 billion won).
The Financial Supervisory Service believes that the two banks are responsible for the incomplete sale of Lime Funds and have violated the obligation to establish internal control standards.
Woori Bank’s sanctions review is about whether the Lime Fund is in bad shape. Woori Bank was not aware of the insolvency in advance, and it is known that the Party also protested that it was a victim of Lime Asset Management.
In the case of Shinhan Bank, it fought with the Financial Supervisory Service over whether it was possible to punish executives for lack of internal control. It is also an issue that the Financial Supervisory Service notified Chairman Cho Yong-byeong of a disciplinary action on the issue of Shinhan Financial Group’s’matrix system’. Shinhan Bank and Shinhan Finance are said to emphasize that it is difficult for the CEO to be deeply involved in the sale of individual products.
The key variable in the sanctions review is the Financial Consumer Protection Office of the Financial Supervisory Service. The Financial Supervisory Service’s petition office came out as a reference and expressed his opinion on Woori Bank’s efforts to remedy the victims after the incident.
Woori Bank was the first to accept the FSS dispute settlement proposal to return 100% of the principal to investors of the Lime Trade Finance Fund (Pluto TF-1). It faithfully follows the FSS dispute settlement procedure based on the estimated loss before the loss is determined. On the other hand, the fiscal supervisory agency is not planning to participate in the Shinhan Bank sanctions review.
If the Financial Supervisory Service’s sanctions review lowers the level of disciplinary action by accepting the opinion of the petitioner, it will be the first case in which a financial company acknowledges its post-mortem efforts. Financial Supervisory Commissioner Yoon Seok-heon recently said in the National Assembly’s Political Affairs Committee, “We are considering whether there are any more mistakes or reasons for sanctions reduction based on the sanctions for the DLF.”
Whether or not the reduction is actually related to the governance problem of the two financial companies. Chairman Son and Chairman Jin will inevitably have a brake on reappointment or challenge to the landlord if the punishment is finalized as it is.
In this regard, the Financial Supervisory Service (FSS) issued a disciplinary punishment (worth a cautious warning) to former chief executive Kim Do-jin of IBK IBK, who sold the Discovery Fund and Lime Fund, which were discontinued during the sanctions review on the 5th. Initially, severe disciplinary action was notified in advance, but the reduction was reported to reflect the bank’s remedy efforts, such as prepayment of investment funds to victims.
Previously, the conclusion came after three trials of sanctions were held against the securities companies selling Lime Funds, such as KB Securities, Shinhan Investment Corp, and Daeshin Securities. The bank’s sanctions deliberation is also likely to be held three times by mid-next month.