KB Securities worker embezzles customers' money

By Jhoo Dong-chan

KB Securities and one of its executives have received a warning after one of its employees embezzled customers' money, the financial authorities said Wednesday.

The Financial Services Commission (FSC) said that it decided to issue a low-level “disciplinary warning” to KB Securities and the related department executive during its regular meeting last week.

During an internal audit, a KB Securities worker was found to have embezzled 360 million ($313,397) from 25 dormant accounts in July. The securities firm immediately dismissed and reported the employee to the prosecution for embezzlement.

KB Securities also repaid money into the customers' accounts. Believing the case was due to a systemic problem rather than an individual's moral laxity, however, the Financial Supervisory Service (FSS) decided to inspect the firm's internal controls system.

“The employee who was found to have embezzled the money is now behind bars. KB Securities managed to avoid severe punishment because it voluntarily reported the case to the financial authorities beforehand,” said an FSC official.

There were concerns that the case could negatively influence KB Securities' efforts to receive approval from the financial authorities for a short-term financing business issuing corporate bonds, but the brokerage is still likely to get approval since it managed to avoid a heavy punishment.

“The FSS has yet to release anything regarding the case. So, there is nothing to comment on at this point,” said a KB Securities official.

KB Securities named KB Financial Group and Kookmin Bank Vice President Park Jeong-rim as the brokerage's co-CEO in December. She was the first female CEO in the nation's securities industry.

KB Securities is the nation's fifth-largest securities firm, but failed to post steady earnings last year ― a 189.6 billion won net profit, down 45.7 billion won, or 19.4 percent, from 2017.