Woori Financial Faces Another Major Disciplinary Threat Over Lime... Rising Concerns Over Leadership

Possibility of Severe Disciplinary Action Again Amid Ongoing 'DLF Disciplinary Cancellation Lawsuit'

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service (FSS) has issued a preliminary notice of a high-level sanction of suspension from duty to Sohn Tae-seung, Chairman of Woori Financial Group, in connection with the 'Lime Fund' scandal, plunging the entire group into another turmoil.

Chairman Sohn is already engaged in a legal battle with the FSS Governor over a severe disciplinary action (a written warning) related to losses from the overseas interest rate-linked derivative-linked fund (DLF) incident. Amid this, with the risk of suspension from duty, a step higher in severity, voices in the financial sector are growing that his leadership could be shaken.

According to financial circles on the 4th, the FSS delivered a notice of suspension sanction to Chairman Sohn, who was the head of Woori Bank at the time of the Lime incident, based on the sector inspection results of Woori Bank, the Lime fund distributor, announced the day before. The FSS will hold a disciplinary review committee meeting on the 25th.

Sanctions against financial company executives are divided into five levels: dismissal recommendation, suspension from duty, written warning, cautionary warning, and caution. Chairman Sohn received a written warning early last year for responsibility in the incomplete sales of the DLF. If he receives a sanction higher than a written warning, he will be restricted from employment in financial companies for 3 to 5 years after completing his remaining term.

Chairman Sohn, who was at risk of failing to be reappointed, maintained his position through a provisional injunction to suspend the disciplinary effect and is currently pursuing a main lawsuit seeking to nullify the disciplinary action. Considering this situation, if the suspension is confirmed, it is widely expected that Chairman Sohn will once again engage in litigation.

If this happens, regardless of maintaining the chairman position, it is anticipated that Chairman Sohn could suffer significant damage.

A source in the financial sector said, "Filing two lawsuits against the supervisory authority with a one-year interval is no easy matter," adding, "Regardless of the outcome, the pressure Chairman Sohn feels is likely very high."

Woori Bank maintains the position that it did not recognize the Lime fund's insolvency in advance. However, there is analysis that the FSS judged that Woori Bank either sufficiently recognized or at least could have recognized the possibility of insolvency.

Controversy over 'CEO Punishment' Amid Lack of Supervisory Responsibility

Criticism is rising again that the financial and supervisory authorities, who should share responsibility for preventing fund accidents, are focusing only on heavily disciplining financial company CEOs after the fact, which could jeopardize the governance of financial companies and shake the overall stability of the financial industry.

A senior official at a major commercial bank said, "Banks are not simply trying to evade responsibility," but pointed out, "Recent fund accidents clearly stem from issues in system design, maintenance, and management, but it is impossible to know who among the authorities is taking responsibility for this."

The official lamented, "When problems arise, suddenly there is a strong inspection and thorough investigation, followed by punishing the CEO as if it is a formal procedure, and financial companies are perceived as entrenched evils. I wonder if this approach is truly aimed at fundamentally solving the problem."

Jin Ok-dong, President of Shinhan Bank, also received a written warning, which corresponds to a severe disciplinary action. In January last year, the FSS imposed suspensions on former KB Securities CEO Yoon Kyung-eun, former Shinhan Financial Investment CEO Kim Byung-chul, and former Daishin Securities CEO Na Jae-chul (current Chairman of the Korea Financial Investment Association), and a written warning on KB Securities CEO Park Jung-rim at the disciplinary review for securities companies that sold Lime funds.

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