FSS to investigate Samsung Securities over merger

Financial Supervisory Service Governor Yoon Suk-heun speaks at an audit of the agency at the National Assembly on Yeouido, Seoul, Tuesday. / Yonhap

By Kim Bo-eun

The Financial Supervisory Service (FSS) will look into Samsung Securities' alleged violations of the capital market act in its alleged involvement in the controversial merger of Samsung Group's affiliates in 2015, FSS Governor Yoon Suk-heun said Tuesday.

The remarks came as Rep. Park Yong-jin of the Democratic Party of Korea (DPK) raised the issue at this year's annual National Assembly audit of the agency.

The lawmaker urged financial authorities to take immediate action to look into the allegations that Samsung Securities intervened in the merger of Samsung C&T and Cheil Industries that took place in September 2015.

The brokerage was an adviser for Cheil Industries in the merger, but is alleged to have hid the fact and utilized its private bankers to secure Samsung C&T shareholders' right to vote in support of the merger.

“We agree with the stance that the probe needs to be launched speedily,” Yoon said. “We will provide at least a rough timeline of plans for the probe before the comprehensive audit.” A comprehensive audit of the supervisory agency is scheduled for Oct. 23.

Yoon said the agency will look into the level of sanctions that could be imposed on Samsung Securities, in response to Park's question of whether the brokerage's alleged irregularities could subject the firm to sanctions ordering business suspension.

Yoon's remarks come a day after Financial Services Commission (FSC) Chairman Eun Sung-soo also agreed on the need to look into Samsung Securities over the matter, during the Assembly's audit of the FSC.

Eun had stated the FSC would coordinate with the FSS on the timing of the inspection.

Rep. Park called Samsung Securities CEO Jang Seok-hoon to the Assembly audit for questioning over the matter, Monday. Jang, who attended the audit, however, said he does not know about the issue because he was not with Samsung Securities at the time.

The prosecution indicted Samsung Electronics Vice Chairman Lee Jae-yong and other Samsung executives last month on multiple allegations including possible violations of the Capital Market Act and external audit act in the merger.

Meanwhile, the FSS chief also stated in the audit he would consider how to make improvements to the agency's dispute settlement committee to enhance its neutrality.

Rep. Kim Byung-wook of the Democratic Party of Korea raised the issue citing the dispute settlement committee's role is set to become increasingly important as dispute settlement cases over financial investment products are expected to increase.

Kim proposed that members of the committee be recommended by outside organizations and that individuals involved in the disputed cases be allowed to take part in committee meetings to put forward their views. Yoon said he would review the proposals.