Financial Supervisory Service imposes 380 million KRW fine on Kyobo Securities for violating fund management regulations
[Asia Economy Reporter Ji Yeon-jin] The Financial Supervisory Service imposed a formal caution and a fine of 380 million KRW on Kyobo Securities for violating regulations on the management of collective investment assets.
According to the Financial Supervisory Service on the 1st, Kyobo Securities received these sanctions on the 29th of last month for violations including failure to block information exchange obligations and prohibition of transactions between collective investment assets using over-the-counter derivatives. One employee was disciplined with a three-month salary reduction and fined 8 million KRW, with a total of four people disciplined.
Financial investment firms are prohibited from holding concurrent executive positions between proprietary asset management and collective investment asset management, but it was revealed that Kyobo Securities allowed an executive to hold concurrent positions after applying for registration as a professional private collective investment business in 2016.
Additionally, in 2018, to avoid the dissolution of a collective investment vehicle with only one investor, Kyobo Securities sold the collective investment securities to its own employees.
Kyobo Securities was also pointed out for conducting transactions between collective investment assets using over-the-counter derivatives by liquidating the total return swap (TRS) contracts of existing funds in 2019 and simultaneously entering into TRS contracts with newly established funds, transferring underlying assets by substituting cash collateral.
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From 2017 to 2020, Kyobo Securities also managed collective investment assets in violation of asset inclusion ratio limits under collective investment regulations. Furthermore, it was detected that from 2019 to 2020, the company traded listed stocks using accounts under other people's names.
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