Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
FSS considers heavy sanctions on Woori, Hana chiefs
The Financial Supervisory Service Governor Yoon Suk-heun looks at documents during a government audit of the agency held at the National Assembly, Oct. 8. / Korea Times file
By Kim Bo-eun
By Kim Bo-eun
The Financial Supervisory Service (FSS) is reviewing punitive measures for chiefs of Woori and KEB Hana banks over the mis-selling of financial derivative options that caused huge losses to investors, according to sources and media reports, Sunday.
The agency's consideration of sanctions for the bank chiefs comes as its inspection of the banks and other financial firms involved in the drawing up and selling of derivative-linked securities options is coming to an end.
An FSS official confirmed Sunday the inspection would be completed this week, but said punitive measures have yet to be decided.
"It usually takes about three months for sanctions to be finalized, as the process involves the examination of legal aspects and other procedures.”
Although the official said the FSS isn't at a stage to determine the details of the punitive measures, it is likely that the bank chiefs will face sanctions.
This is because the FSS chief has maintained that financial firms are responsible for the case.
“Even if investors noted their responsibility in investing in the options, the greater responsibility lies in financial firms,” FSS Governor Yoon Suk-heun said at a government audit held at the National Assembly, Oct. 21.
In addition to sanctions for bank CEOs, the FSS will likely also take measures against the banks.
Hana Bank will likely face a stricter penalty as it was found to have deleted related documents before the FSS began its inspection in late August. The FSS recovered the data through digital forensics and found these were on the bank's sale of the DLF options.
The FSS is expected to conclude the bank's conduct as an “obstruction of inspections.”
Financial authorities are also reported to be considering the option of having financial firms introduce the so-called cooling-off period, during which a customer can choose to cancel any purchase of risky products, such as DLFs.
Also under review by the FSS is to limit the sales of high-risk products at banks.
The Financial Services Commission, which oversees the FSS, will likely introduce a regulation in some form against the sale of high-risk options, as its chief has hinted authorities will take measures to better protect individual investors.
In late August, the FSS began an inspection of the two banks, three securities firms and five asset management companies that were involved in the design and sales of DLF options.
The FSS stated Oct. 1 that it found Woori and Hana sold about 800 billion won worth of DLF products and had engaged in mis-selling about 20 percent of the sold options. Some investors of options tied to yields on German treasury bonds saw the entirety of their investments wiped out due to the fall in interest rates.