The Securities and Futures Commission Files Criminal Complaints Against Union Savings Bank and Alpha Holdings for 'Accounting Violations'

[Asia Economy Reporter Kim Daehyun] The Securities and Futures Commission (SFC) under the Financial Services Commission has taken actions including prosecution referral and imposition of fines against two companies, Union Savings Bank and Alpha Holdings.

On the 2nd, the SFC held its 11th meeting and took these measures against Union Savings Bank and others for preparing and disclosing financial statements in violation of accounting standards.

It was previously investigated that Union Savings Bank failed to account for management fees payable for loan receivables management services received over about two years starting in 2013.

Additionally, although there was an agreement to offset loss compensation arising from the sale of non-performing loans against management fees, the bank did not account for this, resulting in an understatement of loss compensation income. It was also revealed that the estimated recoverable amount of loan receivables was incorrectly calculated, leading to an understatement of the allowance for loan losses.

The SFC resolved to impose a 10-month restriction on securities issuance, a one-year designation of auditor, prosecution referral for the company and former CEO, and a prosecution notification for the former CEO.

Furthermore, the SFC decided on measures including a fine of 449 million KRW and a one-year auditor designation against Alpha Holdings. Alpha Holdings was pointed out for failing to consider impairment indicators related to equity investments and loans to subsidiaries from December 2016 to September of the following year, and for not recognizing impairment losses on investment securities in subsidiaries and available-for-sale financial assets.

Alpha Holdings was also found to have overvalued the stock of subsidiaries and judged that the warrants embedded in the convertible bonds issued by subsidiaries showed no impairment indicators, thus failing to conduct impairment reviews and not recognizing valuation losses.

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