Hana Bank Private Equity Fund Disciplinary Hearing Underway...Will Prior Notice Reduce Severe Sanctions?

The final decision on today's disciplinary action level is not easy

[Asia Economy Reporter Kiho Sung] The Financial Supervisory Service (FSS) held a disciplinary review committee regarding Hana Bank's suspension of redemption of private equity funds and incomplete sales. However, the financial sector expects that the level of disciplinary action will be difficult to determine on this day.

According to the financial sector on the 15th, the FSS held a disciplinary review committee (disciplinary review) for Hana Bank from 2 p.m. that day. The disciplinary review is an advisory body to the FSS Governor that deliberates on sanctions against financial companies and their executives and employees.

Cases involving incomplete sales controversies related to Lime Asset Management, Discovery, Heritage, and Healthcare funds at Hana Bank were brought before the disciplinary review. Previously, the FSS held Hana Bank responsible for incomplete sales and issued a severe disciplinary action of 'institutional warning' to the bank. It is also known that Ji Sung-kyu, then the bank president and now Vice Chairman of Hana Financial Group, received a severe disciplinary action of 'reprimand warning.'

Disciplinary actions against financial company executives are divided into five levels: 'recommendation for dismissal - suspension of duties - reprimand warning - cautionary warning - caution.' Reprimand warning or higher is a severe disciplinary action that restricts reappointment and employment in the financial sector for 3 to 5 years. Accordingly, the key issue in this disciplinary review is whether the CEO can be severely disciplined due to internal control failures.

However, the level of disciplinary action may be reduced depending on Hana Bank's efforts to compensate consumers. The FSS recommended Hana Bank on the previous day to compensate 65% of the loss amount to investors who suffered losses by subscribing to the Lime fund at the bank. Hana Bank also announced a plan to provide a certain level of advance payment first for customer protection and to make the final settlement when the fund is liquidated. On this day, Hana Bank stated that it accepts the FSS Dispute Mediation Committee's proposal (compensation of 40-80% of the loss amount) related to the Lime fund incident.

The financial sector expects that the level of disciplinary action against Hana Bank will not be decided at this disciplinary review. This is because the first trial ruling on the cancellation lawsuit filed by Sohn Tae-seung, Chairman of Woori Financial Group, who received a severe disciplinary action (reprimand warning) related to overseas interest rate-linked derivative-linked securities (DLF), against the FSS is scheduled for the 20th of next month.

The disciplinary logic applied by the FSS in Sohn's lawsuit is also applied to Vice Chairman Ji Sung-kyu. Therefore, there is speculation that the conclusion of Hana Bank's disciplinary review will be made after the court's ruling.

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