[DLF Disciplinary Action] Financial Services Commission "Disagreement with Financial Supervisory Service, Contrary to Facts... Procedure to be Completed by Early March"

Eun Sung-soo, Chairman of the Financial Services Commission, is delivering a congratulatory speech at the seminar on the future direction of the financial group supervision system held at the Bankers' Hall in Jung-gu, Seoul on the 29th. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Kangwook Cho] The Financial Services Commission (FSC) forecasted that all procedures related to sanctions on the overseas interest rate-linked derivative-linked funds (DLF) incident will be completed by early March.

On the 31st, the FSC clarified through a notice that some media reports claiming differences of opinion between the Financial Supervisory Service (FSS) and the FSC regarding the DLF sanction review decisions on Hana Bank and Woori Bank made by the FSS the previous day are not true.

The FSC explained, "The Financial Services Commission and the Financial Supervisory Service will faithfully fulfill their duties according to the authorities and responsibilities stipulated by law for both institutions."

It added, "Matters to be decided by the FSC will be decided by the FSC, and matters to be decided by the FSS will be judged by the FSS according to the standards and procedures prescribed by law," and emphasized, "Reports suggesting differences of opinion between the FSC and the FSS during this process are not true."

Regarding the sanctions and future schedule, the FSC explained that decisions such as business suspension and fines, which are matters for the FSC, will go through FSC procedures including the Securities and Futures Commission, the FSC agenda review subcommittee, and prior notification to the parties involved (for more than 10 days).

It further stated, "We will proceed with the related procedures as quickly as possible to promptly resolve uncertainties related to the sanctions," and predicted, "Although it is difficult to set a definite schedule, the procedures are expected to be completed as early as early March."

In response to concerns that some sanctioned parties might appeal the sanctions (such as through administrative lawsuits), the FSC replied, "It is inappropriate to speculate on matters to be decided by the sanctioned parties based on assumptions when the sanctions have not yet been finalized or notified."

Additionally, regarding whether sanctioned parties can be reappointed as CEOs, the FSC said, "The appointment of executives is a matter decided by the shareholders and board of directors of the respective financial company, and considering various circumstances, it is expected that the company and shareholders will make decisions that best enhance corporate and shareholder value." However, it firmly stated, "According to the Governance Act, if a disciplinary warning is confirmed and notified to the party, they cannot be appointed as a new executive for three years from the date of notification."

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