Breaking the existing policy of severe disciplinary action and settled down as a disciplinary action
“There was a fierce battle over the validity of the CEO disciplinary action.”
Victims “I refused compensation for damage, but it was a disciplinary action…”
“The Financial Supervisory Service and the government-owned bank may have been considered for a special relationship.”
The Financial Supervisory Service imposed a disciplinary punishment on former head of IBK Industrial Bank Kim Do-jin, who sold the Lime Fund and Discovery Fund that had been suspended for redemption. Fund victims predicted a condemnation statement and protests next week, saying, “Even though IBK did not show sincerity for compensation for the victims, we cannot accept that it has ceased to be disciplinary.”
The Financial Supervisory Service held the Sanctions Deliberation Committee on the night of the 5th and decided to propose to the Financial Services Commission that IBK should be suspended for one month and impose a fine. The Financial Supervisory Service confirmed that IBK violated the obligation to establish internal control standards under the Financial Companies Governance Act, but lowered the level of sanctions from severe punishment to hard discipline. At the time of the fund’s sale, the former head of the Industrial Bank of Korea, Kim Do-jin, decided to give a cautious warning and a three-month salary reduction for the former vice-president.
Earlier, IBK sold the products of Discovery Asset Management’s’Discovery US Fintech Global Bond Fund’ and’Discovery US Real Estate Senior Bond Fund’ for KRW 361.2 billion and KRW 318 billion, respectively. However, the redemption of 69.5 billion won and 21.9 billion won, respectively, is delayed as US managers are unable to recover bonds invested in fund funds. IBK also sold Lime Repo Plus 9M of Lime Asset Management, which caused a large-scale redemption suspension, about 29.4 billion won.
In this sanctions review, industry insiders pointed out as a major issue: △Would the CEO of a financial company be held accountable in case of incomplete sales due to lack of internal control standards △How much effort was made to rescue victims of private equity funds. In fact, it is said that there was a fierce battle between the Financial Supervisory Service and the IBK Industrial Bank over this area.
During the sanctions review, IBK IBK officials told reporters, “I know it is not enough to comfort the victims, but I paid 50% of the investment in advance last year, and the head of the business and senior executives were interviewed at least once. He said, “I’m clarifying the point of my efforts for this.”
Victims, “Will the victims scream with each other for the past two years,”
On the other hand, an official from the victims’ group said, “We will announce a condemnation statement on Monday.” On the afternoon of the 5th, the National Private Equity Fund Fraud Victims Joint Countermeasures Committee held a protest in front of the Yeouido Financial Supervisory Service in accordance with IBK’s sanctions review schedule. It must be included in the subject of severe disciplinary action.”
At that day’s rally, Chairman Lee Eui-hwan, Chairman of the Engineering Commission, “proposed’private settlement’ in order to smoothly correct the situation by mutual concessions, but the IBK side continued to answer that it was not unconditionally.” The eggplant payment is nothing more than a blindfold,” he dismissed. The Air Defense Commission also tried to enter the conference hall, saying, “Only if the sanctions are open and transparent, the results will be accepted by the victims, and the sanctions must be allowed to observe the victims and the media.”
There are many opinions in the industry that there are reasons for the victims’ grievance toward IBK.
In fact, IBK Industrial Bank’s consumer protection performance last year was a failing point. According to the ‘2020 Fund Selling Company Evaluation Results’ released by the Korea Financial Investor Protection Foundation on the 2nd, the fund sales procedure (97.5%) to banks (10), securities companies (17) and insurance companies (1) last year. As a result of comprehensive evaluation of and after-sales service (2.5%), IBK IBK, along with Woori Bank and Hana Bank, recorded a stigma of C grade for 6 years.
In relation to the banks that received the C grade, the foundation pointed out that “when the seller’s insufficient fund sales practices become chronic, it may adversely affect not only investor protection but also the citizen’s asset formation.”
Commissioner Lee Eui-hwan said, “The financial authorities have ignored the screams of the victims for the past two years, and the sanctions trial itself has no legal effect, so we will first prepare a statement of condemnation on Monday and coordinate the protest schedule in the future.”
An official from the financial sector said, “Because the role of state-run banks has become more important than ever due to the prolonged corona, it would not have been easy for financial authorities to finalize severe punishment.” He diagnosed that “there was no agreement on whether to punish the CEO (for incomplete sales) from the beginning, and this would have been the background for easing disciplinary action.”
Another official said, “I think the special relationship between the Financial Supervisory Service and the state-owned bank would have served as an advantage to some extent.”
An official from IBK IBK briefly replied, “Unfortunately, the failure to proceed with private reconciliation with the victims is due to the results of an internal legal review,” and “We will faithfully work on the remaining procedures.”
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