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| The headquarters of Meritz Securities in Yeouido, Seoul / Courtesy of Meritz Securities |
By Anna J. Park
The Financial Supervisory Service (FSS) imposed a penalty of 2 billion won ($1.52 million) as well as an organizational warning to Meritz Securities for various violations of the Capital Markets Act. The financial authority also advised the firm to reprimand 64 staff members, including suspension of work, cutting wages and issuing warnings, for their diverse violations.
According to the FSS, Meritz Securities was given the set of sanctions earlier this week, as a result of the financial regulator's regular on-spot inspection conducted in 2021. The securities company was found to have violated numerous obligations stipulated by the country's Capital Markets Act.
For instance, the brokerage company didn't follow procedural rules for selling fund products, such as giving a full explanation on the nature of the risk accompanied when a retail investor purchases a private equity fund product. The company also instructed an employee who was not qualified to sell an investment product to advise customers on investment.
The brokerage is also found to have been involved in cases in which company employees were using accounts that were not officially reported to the firm and in which staff imposed unwarranted additional fees on customers.
In addition, the financial authority said the firm needs to make improvements in consumer protections including in overseas market investment, password management, IT audits and information technology strategic planning. The watchdog agency also urged the securities firm to strengthen foreign exchange liquidity.
In total, the financial watchdog agency reprimanded the firm on 14 items, issued cautions on five items and suggested improvements on 16 items.
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