Financial Authorities to Decide This Week on Appeal in 'DLF Lawsuit'

[Asia Economy Reporter Song Seung-seop] Financial authorities will decide this week whether to cancel the heavy disciplinary action against Sohn Tae-seung, Chairman of Woori Financial Group, related to overseas-linked derivative-linked funds (DLF). The direction of the appeal will also affect sanctions on other financial companies, drawing keen attention from the financial sector.

According to industry sources on the 12th, the Financial Supervisory Service (FSS) must decide by the 17th whether to appeal the DLF-related trial. The FSS received the judgment on the 3rd, and an appeal must be filed within 14 days from then.

The trial began after the FSS imposed a heavy disciplinary action of a "reprimand" on Chairman Sohn in January last year, holding him responsible for the DLF incident. At that time, Sohn filed a lawsuit against FSS Governor Yoon Seok-heon seeking cancellation of the disciplinary action. The Seoul Administrative Court ruled last month that the disciplinary action lacked legal grounds and accepted Sohn’s claim.

The FSS is reportedly deliberating whether to appeal the judgment. It has also been analyzing the standards used to assess the obligation to establish internal control criteria. Initially, there were expectations that the FSS would forgo an appeal since only one of the five reasons for sanctioning Sohn?the violation of the obligation to establish a financial product selection procedure?was acknowledged.

However, after reviewing the judgment confirming Woori Bank’s inadequate internal controls, arguments have emerged that an appeal is necessary. Regardless of the sanction process or severity, the court also partially recognized Chairman Sohn’s responsibility. If the FSS appeals, it is expected to strengthen the authorities’ position when formulating future internal control system reforms. A future victory would also justify the appropriateness of the financial authorities’ sanctions.

On the other hand, if the FSS loses, it could only delay the process and damage the financial authorities’ standing. Disciplinary actions against CEOs of other financial companies could also lead to a series of lawsuits, causing setbacks. Currently, those disciplined by the FSS over the Lime and Optimus incidents include current and former representatives of financial firms such as Shinhan Investment Corp., Daishin Securities, KB Securities, and NH Investment & Securities.

On the 10th, Financial Services Commission Chairman Ko Seung-beom, after meeting with financial group chairmen, told reporters, “The decision on whether to appeal will be made by the FSS, and they will make a comprehensive judgment considering all factors.”

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