Hamyung Joo, Vice Chairman of Hana Financial Group, Loses First Trial to Cancel DLF Sanctions: "Betrayed Trust in Banks"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyung-min] Ham Young-joo, Vice Chairman of Hana Financial Group (former CEO of Hana Bank), lost the first trial of the administrative lawsuit he filed in protest against the heavy disciplinary action he received over losses from overseas interest rate-linked derivative-linked funds (DLF).

The Seoul Administrative Court Administrative Division 5 (Presiding Judge Kim Soon-yeol) ruled on the 14th that the lawsuit filed by Vice Chairman Ham and Hana Bank against the financial authorities to cancel the suspension of business and other sanctions was dismissed.

The financial authorities found that Hana Bank had committed improper sales of DLF and imposed a six-month partial suspension of business (new sales of private funds) and a fine of 16.78 billion KRW on Hana Bank on March 5, 2020. Vice Chairman Ham, who was serving as the CEO at the time, also received a heavy disciplinary action (reprimand) for inadequate management and supervision. Disciplinary actions of reprimand or higher restrict reappointment and employment in the financial sector.

DLF refers to funds that invest in derivative-linked securities (DLS) based on underlying assets such as interest rates, exchange rates, and credit ratings. In the second half of 2019, global bond yields plummeted, causing principal losses in DLS based on U.S., U.K., and German bond yields and the DLFs invested in them.

Hana Bank and Vice Chairman Ham filed an administrative lawsuit and requested a suspension of execution in protest of the disciplinary action. The court accepted the suspension of execution, citing possible disputes over the legality of the sanctions, but ruled in favor of the financial authorities in the main lawsuit.

The court emphasized, "The scale of losses caused by improper sales is enormous, and the plaintiffs’ disregard for investor protection duties while pursuing corporate profits alone betrays the bank’s public nature, safety, trust, and integrity," adding, "The executives need to bear corresponding responsibility."

Meanwhile, Sohn Tae-seung, Chairman of Woori Financial Group, who was also disciplined for improper sales of DLF along with Hana Bank, filed an administrative lawsuit in protest. Chairman Sohn won the first trial and the second trial is currently underway at the Seoul High Court.

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