[DLF Heavy Sanctions] Remaining Issue is Timing of Implementation... Financial Services Commission's Approval Process 'Under Close Watch'

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service's (FSS) Disciplinary Committee has decided on severe sanctions against Sohn Tae-seung, Chairman of Woori Financial Group, and Ham Young-joo, Vice Chairman of Hana Financial Group, in relation to the 'DLF incident,' drawing attention to the timing of the enforcement of these sanctions.

Considering the approval by the FSS Governor and the resolutions of financial authorities, it is expected that the sanctions could take effect sometime after mid-next month.

According to financial authorities on the 31st, among the DLF sanctions decided by the FSS Disciplinary Committee the previous day, the reprimands against Chairman Sohn and Vice Chairman Ham will meet the enforcement requirements upon approval by Yoon Seok-heon, Governor of the FSS. In contrast, sanctions against institutions (Woori and Hana Banks) require approval by the Financial Services Commission (FSC). Both banks received decisions for partial suspension of business for six months and fines from the Disciplinary Committee.

Accordingly, the FSS plans to promptly proceed with the sanction approval process for executives such as Chairman Sohn, while soon recommending the sanction proposals against the banks to the FSC.

The agenda will then move to the Securities and Futures Commission (SFC) for review and the FSC regular meeting for resolution. The SFC and FSC regular meetings are held alternately every Wednesday. The FSC regular meeting is scheduled for next Wednesday (February 5).

Based on these procedures and schedules, it is likely that the sanction proposals against the banks will be resolved in principle at the regular meeting on the 19th.

The sanctions take effect when the parties receive the inspection notice from the FSS. Considering past practices and operational efficiency, the FSS does not separately notify executives of sanctions in advance but plans to notify both cases together once the FSC resolution on the banks is completed.

The timing of enforcement is expected to be particularly sensitive for Chairman Sohn. Last month, Woori Financial recommended Sohn as the next chairman candidate for a three-year term. Accordingly, Sohn was scheduled to be formally appointed at the shareholders' meeting in March.

If a financial company executive receives a severe disciplinary sanction, they may complete their remaining term but will be restricted from employment in financial companies for 3 to 5 years thereafter. If the sanctions take effect next month, Chairman Sohn will lose his eligibility for reappointment.

Although there is an objection procedure, it does not suspend the enforcement of the sanctions. This is why it is highly likely that administrative litigation and accompanying provisional injunction requests to suspend the effect of the sanctions will be pursued.

This content was produced with the assistance of AI translation services.