Financial Supervisory Service Issues Institutional Warning and 2 Billion KRW Fine to Meritz Securities

[Asia Economy Reporter Oh Su-yeon] Meritz Securities received an institutional warning and a fine of approximately 2 billion KRW from the Financial Supervisory Service (FSS) for violating the prohibition on the sale of collective investment securities.

According to the FSS on the 22nd, Meritz Securities was penalized for violations including the prohibition on the sale of collective investment securities aimed at avoiding the termination of a single fund, and the prohibition on receiving unfair financial benefits.

The FSS imposed an institutional warning and a fine of 2.0345 billion KRW on Meritz Securities. Additionally, about 50 related employees of Meritz Securities received disciplinary actions ranging from a maximum three-month suspension to warnings or fines.

This action follows an inspection conducted by the FSS in 2021 targeting Meritz Securities. It was found that Meritz Securities purchased some collective investment securities when there were no other investors to invest in the fund, anticipating the risk of fund termination due to being the sole beneficiary after the fund was established. Furthermore, despite the prohibition on extending credit to professional private collective investment schemes, Meritz Securities provided such credit.

In addition, a center head at Meritz Securities made indirect deposits into a customer’s account to compensate for part of the losses incurred in that customer’s account. Incomplete sales of financial investment products, including private equity funds, were also revealed.

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