Hong Kong ELS Victims "Cannot Accept Authorities' Compensation Proposal... Considering Legal Dispute"

"Bank knowingly sells products despite risks"
"Insufficient penalties for financial companies"

Lee Bok-hyun, Governor of the Financial Supervisory Service, is announcing the dispute mediation guidelines related to large-scale losses of Hong Kong H Index-linked ELS at the Financial Supervisory Service in Yeouido, Seoul, on the 11th. Photo by Kang Jin-hyung aymsdream@

The financial authorities have announced compensation guidelines regarding the Hong Kong H Index (Hang Seng China Enterprises Index·HSCEI) equity-linked securities (ELS) incident, which resulted in massive principal losses. However, the victims are expressing that the compensation plan favors banks and securities firms, the sellers, and they cannot accept it.

On the 12th, Gil Seong-ju, chairman of the Hong Kong ELS Victims' Association, said on MBC Radio's "Kim Jong-bae's Focus" that the compensation plan proposed by the financial authorities "only appears to be based on the banks' standards," adding, "On the surface, it seems like a detailed plan for the victims, but upon closer inspection, the proportion of fault attributed to the sellers (%) is too low. It seems to be a compensation plan based on the banks' standards."

The compensation criteria presented by the Financial Supervisory Service vary. If it is confirmed that financial companies aggressively sold the products, investors who are elderly, lack financial knowledge, or are first-time ELS subscribers can receive higher compensation. Conversely, if investors have invested multiple times or have cumulative profits exceeding losses, the compensation amount they can receive is reduced. Under the principle of investor self-responsibility, it is realistically estimated that the majority will receive compensation at a level of 20-60%.

Chairman Gil mentioned that selling products without intentionally disclosing their risks or importance constitutes fraud, stating, "Banks knowingly and deliberately sold the products despite being aware of the risks." Regarding the Financial Supervisory Service's stance that collective compensation is only possible if there is evidence of organized involvement by banks, he said, "That evidence has already been publicized," reinforcing the need for collective compensation.

Chairman Gil added, "How can the principle of self-responsibility be imposed on subscribers when the sellers' responsibility was not upheld and the sales began illegally and unlawfully?" expressing that penalties against financial companies are insufficient. He continued, "The amount that can be compensated is around 50%. I did nothing wrong, but the bank staff signed me up while violating the prohibition on unfair transactions. I cannot accept this plan," expressing his frustration. He further stated, "Until voluntary compensation comes from the banks, our association will pursue litigation, and if that fails, we are prepared to take legal action."

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