Unexpected Ruling Leaves Ham Young-joo's Team 'Bewildered'... Authorities Also Pondering

Loss in lawsuit demanding cancellation of heavy sanctions related to DLF
Contrasting outcome with Sohn Tae-seung, Chairman of Woori Financial Group
Judicial risks remain despite chairman appointment
Financial authorities troubled by mixed results in similar cases
Confusion over industry sanction severity decisions

Ham Young-joo, Vice Chairman of Hana Financial Group (former CEO of Hana Bank), who has been on trial for nearly four years on charges of exerting influence on the recruitment of new employees at Hana Bank to ensure the success of a specific applicant, was acquitted in the first trial on the afternoon of the 11th and is seen leaving the Seoul Western District Court while responding to questions from the press.
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The term of Vice Chairman Ham Young-joo, who has been nominated as the next chairman of Hana Financial Group, has begun amid controversy. Although he was acquitted in the first trial related to recruitment, he lost the first trial in a lawsuit filed against the Financial Supervisory Service (FSS) to cancel the heavy disciplinary 'written warning' imposed in connection with the past derivative-linked fund (DLF) loss incident, failing to completely resolve the 'judicial risk.' The financial authorities, who intended to refer to the trial results for sanctions related to the past fund incident, are also facing difficulties.

According to the financial industry on the 15th, Hana Financial Group plans to proceed with the appointment of Vice Chairman Ham Young-joo as chairman. Although they lost the first trial in the administrative lawsuit demanding the cancellation of the FSS's heavy disciplinary action the day before, they immediately appealed. Accordingly, the suspension period of the heavy disciplinary execution is expected to be extended. Since the employment restriction sanction will not be applied until the final judgment, there is no problem with the appointment. Also, the regular shareholders' meeting, where the agenda for the new chairman appointment will be presented, is scheduled for the 25th, leaving no time to select a new candidate.

Contrary to expectations that judicial risks related to recruitment and DLF sales would be smoothly resolved before the shareholders' meeting, the start of the 'Ham Young-joo administration' is facing a rough situation. There are also concerns that noise may continue as the trial proceeds in the future. Especially if a final guilty verdict is issued during the chairman's term, the calculations will become complicated.

The trial results have deepened the financial authorities' concerns. Previously, the Financial Services Commission (FSC) had only decided on sanctions for violations of the Capital Markets Act amid a series of lawsuits over sanctions against financial companies and executives related to various fund incidents, while deferring decisions on sanctions under the Financial Company Governance Act. At that time, the FSC stated that sanctions for violations of the Financial Company Governance Act would be "comprehensively judged after reviewing the legal principles of similar case trial results and comparing agenda items."

This similar case refers to the cases of Chairman Sohn Tae-seung of Woori Financial Group and Vice Chairman Ham, who received the same heavy disciplinary action from the FSS related to the DLF fund. Chairman Sohn won the lawsuit to cancel the disciplinary action related to incomplete sales of DLF in August last year. The Seoul Administrative Court Administrative Division 11 (Presiding Judge Kang Woo-chan), which handled the trial, stated, "The FSS misunderstood the legal principles and recognized the grounds for the disposition beyond the legally permitted scope." This is interpreted as meaning that under current law, there is an obligation to 'establish' internal control standards but not an obligation to 'comply' with them. However, the Seoul Administrative Court Administrative Division 5, which handled Vice Chairman Ham's trial, explained that Vice Chairman Ham violated the obligation to 'establish' them.

If Vice Chairman Ham had also won the disciplinary cancellation lawsuit following Chairman Sohn, the financial authorities would have been more likely to lower the level of sanctions considering this, but the differing results complicate the situation. If the FSC waits for the second trial results for a clearer judgment, sanctions against executives related to various fund incidents could be delayed for a long time.

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