[2020 National Audit] Sharp Increase in Unfair Business Practices by Financial Companies... 115 Cases in 5 Years

Data from Song Jae-ho, Democratic Party member of the Political Affairs Committee
Most cases involve mismanagement of investment assets against regulations

[Asia Economy Reporter Jeon Jin-young] The number of cases of financial companies engaging in unsound business practices has been increasing every year. According to data received by Song Jae-ho, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, from the Financial Supervisory Service on the 12th, the number of cases of unsound business practices detected at 54 financial companies from 2016 to August of this year reached 115.

[Image source=Yonhap News]

The number of detected cases steadily increased from 8 in 2016 to 20 in 2017 and 26 in 2018. Although it seemed to decrease to 20 cases last year, it surged to 41 cases as of August this year. Among the types of unsound business practices detected, the most common was the mismanagement of collective assets gathered through investments in violation of regulations, accounting for 20 out of the total 115 cases. This was followed by 17 cases where executives and employees received compensation from fees incurred during transactions. In particular, two former managing directors of Korea Asset Trust were caught in January this year for pursuing personal gains with entrusted investment funds. The scale of the detected acquisition alone amounted to 47.3 billion won.

By company, Hanwha Investment & Securities had the highest number with 10 cases, followed by Hana Financial Group and Eugene Investment & Securities with 8 cases each, and eBest Investment Securities with 5 cases.

Under the current Capital Markets Act, all financial companies, including investment dealers, investment brokers, collective investment managers, and trust companies, are prohibited from engaging in unsound business practices. Violations can result in fines or penalties and actions against executives and employees.

Assemblyman Song stated, "The moral laxity and negligence of financial companies are becoming serious," adding, "In particular, when those involved pursue private interests or manage assets recklessly with funds gathered through investments, it is a betrayal of the trust investors place when entrusting their money." He emphasized, "Strict punishment for such acts and strengthening the financial authorities' surveillance network are necessary to prevent investors from suffering unexpected damages."

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