Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
CEOs of KB Securities, NH Securities hit for mis-selling Lime, Optimus
The Financial Services Commission (FSC) headquarters in Seoul / Courtesy of FSC
By Anna J. Park
The Financial Services Commission (FSC) has decided to impose a disciplinary action of a three-month suspension on KB Securities CEO Park Jeong-rim in relation to the mis-selling of problematic funds such as Lime and Optimus.
NH Investment & Securities CEO Jeong Young-chae was subject to a "reprimand warning," in the FSC's terminology. Daishin Securities' Vice Chairman Yang Hong-seok received a "cautionary warning," which is a lower level of sanction than a "reprimand warning."
The disciplinary actions over the heads of the brokerage firms were made during the FSC's regular meeting on Wednesday afternoon.
The levels of sanctions by the financial authorities against executives of a financial company are named as following, in order of severity: caution, cautionary warning, reprimand warning, suspension from work and recommendation of dismissal.
Financial company executives who receive a sanction of "reprimand warning" or higher are restricted from employment at financial companies for three to five years.
With the top financial regulator's decision, Park and Jeong's reappointments at the firms will now be de facto impossible.
KB Securities CEO Park Jeong-rim, left, and NH Investment & Securities CEO Jeong Young-chae
Park's term was set to end in December, while Jeong's term ends in March next year.
Both alumni of Seoul National University's department of business administration, Park and Jeong have worked in leadership positions of the financial industry for a long time.
The FSC urged the financial sector once again to comply with internal controls.
"While it is important to impose sanctions on financial companies for violating their obligations to come up with internal control standards and to hold them accountable, financial companies and their top executives are required to establish effective internal controls on their own," the FSC said.
The Lime fund crisis resulted in losses totaling 1.6 trillion won in 2019, while the Optimus fund scandal resulted in 508 billion won in financial losses for investors. There was controversy over whether customers were provided full explanations about the risks associated with the funds.
According to the FSS, KB Securities sold 107.6 billion won worth of the Lime fund, while the fund sold by Daishin Securities amounted to 68.1 billion won. NH Securities, meanwhile, was mired in controversy as it sold 84 percent of the problematic Optimus funds.