Severe Disciplinary Actions for Lime Selling Bank CEOs... Sohn Tae-seung 'Suspended from Duty' · Jin Ok-dong 'Reprimanded'

Financial Supervisory Service Disciplinary Committee Pre-Notifies Severe Sanctions on Lime-Related Selling Banks
Son Tae-seung, Chairman of Woori Financial, Faces Unprecedented Consecutive Severe Sanctions

Son Tae-seung, Chairman of Woori Financial Group

[Asia Economy Reporter Kwangho Lee] The Financial Supervisory Service (FSS) has given prior notice of severe disciplinary actions to the CEOs of Woori Bank and Shinhan Bank in connection with the Lime Asset Management fund scandal, which caused a large-scale suspension of redemptions.

According to financial authorities on the 4th, the FSS sent preliminary sanction notices yesterday based on the inspection results of Woori Bank and Shinhan Bank, the sellers of Lime funds. Son Tae-seung, then CEO of Woori Financial Group and Woori Bank during the Lime incident, was notified of a suspension of duties, while Jin Ok-dong, CEO of Shinhan Bank, received a reprimand warning.

The disciplinary levels for financial company executives are divided into five stages: dismissal recommendation, suspension of duties, reprimand warning, cautionary warning, and caution. Among these, reprimand warning or higher is classified as a severe disciplinary action that restricts employment in financial companies for 3 to 5 years.

If the reprimand warning sanction against CEO Jin is finalized after going through the disciplinary review and the Financial Services Commission, CEO Jin, who succeeded in a two-year renewal of his term last March, will face obstacles to a third term or a challenge for the financial holding company chairman position. Accordingly, there is a possibility that CEO Jin may follow the example of Chairman Son, who filed an administrative lawsuit against the severe disciplinary action during the Derivative Linked Fund (DLF) scandal.

Chairman Son filed an administrative lawsuit along with a provisional injunction to suspend the effect of the severe disciplinary action after the FSS issued a reprimand warning in January last year, holding him responsible for the incomplete sales of DLF. Thanks to the Seoul Administrative Court accepting the injunction, he succeeded in renewing his three-year term as chairman in March last year. If the suspension of duties is finalized this time, it is also expected that he may respond with a lawsuit again.

The FSS is known to have imposed severe disciplinary actions, holding them responsible for incomplete sales. The difference in the disciplinary levels between Chairman Son and CEO Jin is believed by the industry to be due to the differing levels of disciplinary actions against the incomplete sales perpetrators.

Jin Ok-dong, President of Shinhan Bank

In the case of Woori Bank, the head of the department responsible for incomplete sales was dismissed, and Chairman Son, the supervisor, was notified of suspension of duties. Disciplinary actions against supervisors are set one level lower than those against the perpetrators. Woori Bank maintains that it did not recognize the potential insolvency of the Lime fund in advance, but the FSS is believed to have judged that Woori Bank was aware of the possibility of insolvency. At Shinhan Bank, the disciplinary level for the perpetrator was set as suspension of duties, and CEO Jin, the supervisor, was notified of a reprimand warning. Shinhan Bank (KRW 276.9 billion) was the third largest seller of Lime funds after Woori Bank (KRW 357.7 billion) and Shinhan Investment Corp. (KRW 324.8 billion).

Cho Yong-byeong, Chairman of Shinhan Financial Group, received a minor disciplinary action of a cautionary warning. The FSS reportedly took issue with the 'matrix system' at the Shinhan Financial Group level. It viewed that Shinhan Financial Group had management responsibility for the operation of the complex branches where Shinhan Bank and Shinhan Investment Corp. sold Lime funds.

The disciplinary review for these banks is scheduled to be held on the 25th of this month.

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