[2021 National Audit] Securities Firms' Financial Accidents Total 76 Billion Won Over 6 Years

[Asia Economy Reporter Ji Yeon-jin] It has been revealed that Shinhan Financial Investment experienced a financial accident exceeding 10 billion KRW this year.

On the 6th, Kim Byung-wook, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, received data from the Financial Supervisory Service titled ‘Status of Financial Accidents by Securities Companies over the Past 6 Years,’ which showed that from 2016 to July 2021, there were 56 financial accidents totaling 76 billion KRW at securities firms.

A financial accident refers to a case where an employee or other person affiliated with a financial institution commits illegal or unfair acts, causing losses to the financial institution or its clients, or disrupting financial order.

By year, financial accidents occurred as follows: 17 cases amounting to 16.8 billion KRW in 2016; 9 cases totaling 6.2 billion KRW in 2017; 16 cases with 25.5 billion KRW in 2018; 6 cases amounting to 4.5 billion KRW in 2019; 6 cases totaling 300 million KRW last year; and 2 cases amounting to 22.5 billion KRW this year.

In particular, in February this year, Shinhan Financial Investment experienced a major financial accident involving 17.5 billion KRW related to overseas unlisted stock trusts. According to Assemblyman Kim, this is the first time since 2016 that a securities company has had a financial accident exceeding 10 billion KRW. According to Shinhan Financial Investment, after an internal audit, disciplinary actions were taken against those involved, and the full amount of the accident was refunded.

Under the Capital Market Act, securities companies must report to the Financial Services Commission and promptly disclose on their websites if significant events occur that could seriously affect the management status of financial investment businesses, such as large-scale financial accidents.

Assemblyman Kim Byung-wook stated, “Financial accidents, whether large or small, that occur annually at securities companies are fatal incidents that undermine trust in the capital market. Securities companies must strengthen their internal controls to prevent financial accidents, enhance employee education and disciplinary measures, and make efforts to prevent moral hazard for the protection of financial consumers and the sound development of the capital market.”

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