Optimus Disciplinary Hearing, Partial Suspension of NH Investment & Securities Operations... Reprimand Warning to CEO Jung Young-chae

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[Asia Economy Reporter Ji-hwan Park] On the 25th, the Financial Supervisory Service (FSS) held the 3rd Disciplinary Committee meeting and imposed severe disciplinary action on Jung Young-chae, CEO of NH Investment & Securities, the largest distributor, in connection with the suspension of redemptions of the Optimus Asset Management private equity fund. The FSS recommended the Financial Services Commission (FSC) to impose a partial business suspension and fines on NH Investment & Securities. It also decided to partially suspend some operations of Hana Bank, which was responsible for fund custody and management.

On the same day, at 2 p.m., the FSS held the final disciplinary hearing related to the Optimus fund and resolved to downgrade the disciplinary action against CEO Jung from the originally pre-notified "3-month suspension" to a reprimand.

The disciplinary levels for financial company executives are divided into five stages: 'dismissal recommendation - suspension - reprimand - cautionary warning - warning.' If an executive receives a reprimand or higher, reappointment and employment in the financial sector are restricted for 3 to 5 years. If CEO Jung's disciplinary level is finalized as is through the Securities and Futures Commission and the FSC, it will be difficult for him to be reappointed when his term ends in March next year.

Regarding NH Investment & Securities, the FSS plans to recommend to the FSC partial business suspension and fines for violations including prohibition of unfair solicitation (Article 49 of the Capital Markets Act), failure to establish internal control standards (Article 24 of the Governance Act), failure to verify explanation contents (Article 47 of the Capital Markets Act), and violation of investment advertisement procedures (Article 57 of the Capital Markets Act).

Disciplinary actions against financial companies are classified into five stages: 'registration/license cancellation - business suspension - corrective order - institutional warning - institutional caution.' Generally, institutional warnings and above are considered severe disciplinary actions. If partial business suspension is confirmed, the institution will be barred from entering new businesses for a certain period.

The FSS also imposed a partial business suspension on Hana Bank, the custodian of the Optimus fund, for violations including prohibition of transactions among collective investment assets under custody and management (Article 246 of the Capital Markets Act) and acquisition/disposal of investment target assets without operational instructions (Article 80 of the Capital Markets Act). This is the first disciplinary action by financial authorities against a custodian.

The FSS explained, "Considering that the subject of the review involved significant investor damage and social controversy, we thoroughly listened to statements and explanations from the Inspection Bureau and the securities company, carefully examined all relevant facts and evidence, and made the resolution."

However, the disciplinary levels decided by the FSS on this day may change in the future. The final disciplinary content will be confirmed through the approval of the FSS Governor, review by the Securities and Futures Commission, and resolution by the FSC for each subject of action.

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