'DLF Heavy Sanctions' Expected to Take Effect Early Next Week... Son Tae-seung and Financial Supervisory Service Enter Legal Battle Countdown (Comprehensive)

Financial Services Commission Approves Sanctions on Woori and Hana Banks
Notification to Parties Soon Along with Executive Sanctions
Son Tae-seung Likely to Take Legal Action for Reappointment

Son Tae-seung, Chairman of Woori Financial Group

[Asia Economy Reporter Kim Hyo-jin] The legal battle between Sohn Tae-seung, Chairman of Woori Financial Group, and the Financial Supervisory Service (FSS) over the 'DLF heavy sanctions' has entered its final countdown as the last procedure for the enforcement of the FSS sanctions has been completed.

Chairman Sohn is expected to file a lawsuit next week to suspend the effect of the sanctions. If the sanctions remain in effect, Chairman Sohn will not be able to be reappointed.

According to financial authorities on the 4th, the Financial Services Commission (FSC) held a regular meeting at the Government Complex Seoul in the morning and approved institutional sanctions against Woori Bank and Hana Bank related to the overseas interest rate-linked derivative-linked fund (DLF) loss incident.

The FSS recommended to the FSC at the end of January imposing fines of 22.7 billion KRW and 25.5 billion KRW respectively on Woori Bank and Hana Bank, along with a six-month suspension of some business activities (new sales of private funds). However, during the Securities and Futures Commission meeting held on the 12th of last month, the fines were reduced to 19.7 billion KRW and 16.7 billion KRW respectively and were approved as is.

Along with sanctions on the banks, the FSS decided on a heavy disciplinary sanction of a 'written warning' against Chairman Sohn and Vice Chairman Ham Young-joo of Hana Financial Group.

Unlike the sanctions on institutions (banks), sanctions on executives such as Chairman Sohn do not require FSC approval and are decided solely by the FSS Governor, so they were confirmed early but have not yet taken effect.

The effect of the sanctions occurs when the parties receive the FSS inspection report containing the details and grounds of the sanctions. The FSS decided not to notify Chairman Sohn and others separately but to notify them together with the institutional sanctions.

Once the FSC formally delivers the approved contents to the FSS, the FSS will complete the preparation of the inspection report and notify the sanctioned parties in person. An FSS official said, "Considering the usual cases, the notification procedure is expected to be completed early next week."

The party in urgent need is Chairman Sohn. The Woori Financial executive nomination committee recommended Chairman Sohn as the next chairman candidate for a three-year term at the end of last year.

Chairman Sohn's reappointment is scheduled to be finalized at the shareholders' meeting on the 25th, but it may be blocked by the 'DLF heavy sanctions.' If he receives a written warning, he cannot be employed by financial institutions for three years.

To be reappointed, Chairman Sohn must nullify or at least suspend the sanctions before the shareholders' meeting. Accordingly, Chairman Sohn is expected to file an administrative lawsuit next week arguing that the sanctions are unfair and, before the full dispute, apply for a provisional injunction to suspend the effect of the sanctions.

A Woori Financial official said, "This is purely a personal response by Chairman Sohn," adding, "It is difficult to specifically predict the timing of filing the lawsuit."

Meanwhile, the Blue House's Office of Civil Affairs has begun an inspection of the FSS, drawing attention to the background and results. The Blue House is reportedly reviewing whether the FSS's sanctions and other actions constituted abuse or misuse of supervisory authority. This is because the heavy sanctions related to the DLF have created a situation where the governance of major financial holding companies is at risk. A financial industry official said, "The results of the Blue House's inspection could influence the administrative lawsuit process in the future."

Regarding this, FSS Governor Yoon Seok-heon attended the FSC regular meeting on the day and, when asked by reporters on his way back about the Blue House's inspection, said, "The FSS is an audited institution," and added, "I have nothing to say about the inspection."

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