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.
FSS in dilemma over court ruling favoring Woori CEO
The headquarters of the Financial Supervisory Service located on Yeouido, Seoul / Korea Times file
By Anna J. Park
By Anna J. Park
Market watchers are closely paying attention to whether the Financial Supervisory Service (FSS) will decide to file an appeal with a higher court regarding a lower court trial that resulted in the annulment of the punishment imposed on Woori Financial Group CEO Son Tae-seung over the improper selling of high-risk derivative-linked funds (DLFs).
The FSS has until Friday to file an appeal, after receiving the court ruling Sept. 3 ― an appeal must be filed within 14 days of the official receipt of a court verdict.
The Seoul Administrative Court ruled in favor of Son, who brought the case against the FSS after he received a “reprimand” from the financial authority over Woori Financial Group's failure to set up internal control standards to prevent the mis-selling of DLFs.
In early 2020, the FSS imposed the reprimand sanction, which is considered severe punishment, on Son. High-ranking officials at financial companies who receive such punishment should be terminated (subject to appeal) and are prohibited from working at any financial institutions for the next three years.
Two months after receiving the punishment, Son filed an injunction to freeze the effect of the sanction, which he won, and then a suit with the administrative court to nullify the punishment. The court ruled in his favor, stating that the reprimand lacked a legal basis.
The next move by the FSS will have significant ramifications ― whatever it decides to do ― given that it is considering pending cases involving financial company officials over the mis-selling of other problematic funds such as Lime and Optimus. Its decisions in these cases have yet to be confirmed as they are waiting scrutiny by its overseer, the Financial Services Commission.
The FSS could appeal to save face and show that its authority to dole out punishments is inviolatible. Observers say the FSS could choose this path, as the administrative court's ruling also partly acknowledged Woori Bank's failure to fully prepare internal control standards. An appeals court could view this as partly justifying the FSS's original punishment imposed on Son.
However, if it loses, the negative impact could be significant due to the other pending cases involving the financial officials in the Lime and Optimus funds fiasco.
Also, not appealing could signal that the FSS acknowledges that punishments imposed in the past were inappropriate.