Despite Harsh Objections... Financial Services Commission Approves Original Disciplinary Proposal for 'Lime Asset Management'

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] As the financial authorities' sanctions related to the 'Lime Incident,' which caused damages worth around 1.6 trillion KRW, enter the final stage, attention is focused on the final level of disciplinary action. The sanctions against Lime Asset Management, the main culprit of the Lime Incident, and the 'avatar asset management companies' have been finalized according to the original plan by the Financial Supervisory Service (FSS).

On the 9th, the Financial Services Commission (FSC) held a Securities and Futures Commission (SFC) meeting the previous day and approved the imposition of fines on Shinhan Financial Investment, KB Securities, and Daishin Securities, which sold Lime funds. The SFC had discussed sanctions against these securities firms twice, in November last year and last month, but failed to reach a conclusion, leading to a third meeting on this day.

At the FSS's Sanctions Review Committee last November, it was decided to recommend to the FSC the imposition of fines, partial suspension of business, and disciplinary actions against current and former CEOs of the three securities firms. Yoon Kyung-eun, former CEO of KB Securities, Kim Hyung-jin, former CEO of Shinhan Financial Investment, and Na Jae-cheol, former CEO of Daishin Securities (currently Chairman of the Korea Financial Investment Association), were each given a 'suspension of duties,' while Park Jung-rim, CEO of KB Securities, received a 'reprimand warning' as a severe disciplinary action. Kim Byung-chul, former CEO of Shinhan Financial Investment, received a mild disciplinary action of a 'cautionary warning.' The final sanctions on institutions and top executives (CEOs), as well as the specific amounts, will be decided later by the FSC. Recently, the FSS also notified Sohn Tae-seung, Chairman of Woori Financial Group, of a suspension of duties and Jin Ok-dong, President of Shinhan Bank, of a reprimand warning as severe disciplinary actions related to the Lime Asset Management private equity fund incident.

In this regard, the FSC approved the FSS's original sanction proposal against Lime Asset Management at its 21st regular meeting on the 5th. Lime Asset Management was subjected to deregistration, an order to transfer trust contracts, and a fine of 950 million KRW. The CEO was suspended from duty for six months, the former vice president was dismissed and fined 25 million KRW. Directors down to department heads and section chiefs were fined 25 million KRW each. Portfolio Korea Asset Management and Raum Asset Management were each given a six-month partial suspension of business and fines of 700 million KRW and 450 million KRW, respectively. Racoon Asset Management received an institutional warning and a fine of 100 million KRW. Although these asset management companies argued at the meeting that the maximum level of fines and disciplinary actions against executives were "harsh," the original proposals, including a three-month suspension of duties and suspension for executives and employees, were approved as is.

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