DLF First Trial Verdict Postponed to the 27th

[Asia Economy Reporter Kiho Sung] The first trial verdict hearing for Sohn Tae-seung, Chairman of Woori Financial Group, who filed a lawsuit against the Financial Supervisory Service (FSS) to cancel the disciplinary action related to the overseas interest rate-linked derivative-linked fund (DLF), has been postponed to the 27th.

The Seoul Administrative Court decided to postpone the first trial verdict hearing, originally scheduled for 2 p.m. on the 20th, to 2 p.m. on the 27th.

Earlier, in January last year, the FSS imposed a severe disciplinary warning on Chairman Sohn, holding him responsible for the DLF incident. At the time of the DLF sales, Sohn was the CEO of Woori Bank. When a financial company executive receives a severe disciplinary action, they are prohibited from employment in financial companies for the next three years. Accordingly, in March last year, Sohn filed an administrative lawsuit to cancel the disciplinary action and also requested a provisional injunction to suspend the disciplinary effect until the verdict was issued. The Seoul Administrative Court ruled in favor of Sohn regarding the provisional injunction.

The key issue in this lawsuit is whether the violation of the obligation to establish internal control standards under the Financial Company Governance Act (Governance Act) can be grounds for severe disciplinary action against a CEO. According to the current Governance Act, "Financial companies must establish standards and procedures (internal control standards) that financial company executives and employees must comply with when performing their duties to comply with laws, conduct sound management, and protect shareholders and stakeholders." The FSS argues that Sohn's disciplinary action is justified based on this, stating that he failed to establish "effective" internal control standards. On the other hand, Sohn's side claims that since internal control standards were already established, disciplining the management for deficiencies is unfair.

The financial sector is paying close attention to the outcome of Sohn's lawsuit, as the core issue in disciplinary actions against other financial company CEOs related to private equity funds is also whether internal control standards were established. Jung Young-chae, CEO of NH Investment & Securities, received a disciplinary warning in March last year for selling the Optimus fund. In November last year, Park Jung-rim, current co-CEO of KB Securities (disciplinary warning), Na Jae-cheol, former CEO of Daishin Securities (suspension of duties), and Kim Hyung-jin and Kim Byung-chul, former CEOs of Shinhan Financial Investment (suspension of duties and cautionary warning, respectively), were disciplined. Additionally, Ji Sung-kyu, Vice Chairman of Hana Financial Group, has also been pre-notified of a disciplinary warning.

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