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Financial Supervision Service
The Financial Supervision Service held a second committee to review sanctions against securities companies related to the Lime crisis. The main question was how much the chief executives of securities companies (CEOs) were involved in fraudulent activities such as Lime’s “fund lock”.
The Financial Supervision Service conducted a sanctions review on the 5th and discussed the level of sanctions against KB Securities, Shinhan Investment Corp, Daishin Securities and employees.
The Financial Supervision Service notified these securities companies of severe disciplinary measures, such as institutional warnings and commercial suspension. Past and current CEOs such as KB Securities Chairman Park Jung-lim (representatives) and Na Jae-cheol Na (currently Chairman of the Financial Investments Association) have also been subjected to severe disciplinary action, such as a warning from censorship and suspension of work.
Previously, the Financial Supervision Service discussed sanctions against Shinhan Gold Investment and Daishin Securities in the first sanctions review on 29 last month, but could not conclude.
In the sanctions trial, the positions of FSS and each company were closely clashed over suspicions of involvement in the Lime crisis between Shinhan Gold Investment and KB Securities’ Prime Brokerage (PBS) related departments. The Financial Supervision Service believes that Shinhan Gold Investment and KB Securities provided a total return exchange loan (TRS) of more than 1 trillion KRW to Lime Fund, which actively aided Lime’s domestic and foreign fund fraud. Lim Mo, former head of Shinhan Geumtu’s PBS headquarters (restriction) and Kim Mo, former team leader of KB Securities Delta One Solutions Department, are being investigated by prosecutors for participating in fund fraud.
The FSS logic is that the CEO is the executive director of internal control under the Financial Companies Governance Act.
The securities companies are protesting, saying: “The case is an individual deviation of the executives and employees, but the severe punishment against the CEO, although the CEO was not directly involved, is an excessive application of the law.” An official from the financial authorities said: “As the situation of each company is different, the degree of involvement of the CEO in the department that caused the problem will be the criterion for determining the level of sanctions against individual CEOs.”
Sanctions other than Lime were also discussed, such as the German Heritage Derivatives Combined Securities (DLS) and the Australian Real Estate Fund, which caused the suspension of the refund last year. It is reported that Kim Seong-hyun, Chairman of KB Securities (representing each), has been subjected to severe disciplinary measures in this regard.
In the financial investment industry, there is an expectation that the FSS may reflect ‘consumer harm relief efforts’ in sanctions against sellers of funds. In August, vendors accepted the recommendation of the FSS Dispute Mediation Committee to fully compensate the Lime Trade Finance Fund.
The Financial Supervision Service plans to initiate sanctions against banks as soon as the sanctions for securities companies end. Financial Supervision Commissioner Yoon Seok-heon met with reporters on this day and said, “The deliberation of sanctions on Lime banks like Woori and Shinhan Bank will start next month.”
Reporter Oh Hyeong-joo [email protected]
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