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| Employees of local brokerage firms enter into the headquarters of the Financial Supervisory Service (FSS) on Yeouido in Seoul, Tuesday, to attend the financial watchdog's sanctions committee held on that day. / Yonhap |
By Anna J. Park
The Financial Supervisory Service (FSS) sanctions committee decided on various sanctions Tuesday night against three local brokerage firms ― Shinhan Financial Investment, Daishin Securities and KB Securities ― for the mis-selling of scandal-ridden Lime fund products, punishing them with penalties, branch operation suspensions and dismissals of company chiefs.
The firms responded Wednesday that it's still too early to make specific comments regarding the penalties, yet they seemed to share caution over the financial watchdog's sanctions for the time being.
"For now, the firm has not much to comment about, as there still are more procedures at the Securities and Futures Commission and the Financial Supervisory Commission for the sanctions to be confirmed," an official from Shinhan Financial Investment told The Korea Times. "If there's anything the firm needs to cooperate and prove, we will do it."
The other two securities firms ― Daishin and KB ― also took similar stances about the matter when asked over the phone.
"First of all, the firm takes the FSC sanctions committee's results with a heavy heart, although more procedures are left as of now," an official from Daishin Securities said.
A KB Securities official added, "As the issue is still ongoing, with other procedures still left at the Securities and Futures Commission and the Financial Supervisory Commission, it's not appropriate to comment about the matter for now."
Heavy penalties on CEOs
The FSC's sanctions committee held previous meetings on Oct. 29 and Nov. 5 about Lime fund sellers, before announcing various penalties on the three brokerage firms at its third meeting Nov. 10.
It handed down suspension of duties orders to former Shinhan Investment CEOs Kim Hyung-jin and Kim Byung-cheol and former Daishin Securities chief Na Jai-chel, who is the current chairman of the Korea Financial Investment Association. KB Securities' current co-CEOs Park Jeong-rim and Kim Sung-hyun received reprimand warnings, while former CEO Yoon Kyung-eun was suspended from duties.
Such decisions by the sanctions committee are not yet legally binding, and a final authoritative verdict will be confirmed either by the approval of the FSC chief or nine commissioners of the Financial Supervisory Commission. The possibility of filing administrative litigations also remains for some of the brokerage chiefs.
An FSC official said the sanctions committee will have another meeting led by the financial watchdog for another type of fund seller ― local banks this time around ― sometime next month or early next year.
The financial authority's sanctions committee announced a set of penalties regarding asset management firms late October, canceling Lime Asset Management's business license. Lime's unsound funds incurred financial losses of some 1.6 trillion won ($1.44 billion) for about 4,000 retail investors.
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