Financial Supervisory Service,’cautionary warning’, lowering it by one level from’result warning
Partial suspension of 1 month and penalty imposed on IBK
In the News Reporter Eun-Shil YooㅣThe Financial Supervisory Service issued a’cautionary warning’ against former president Kim Do-jin, who led IBK Industrial Bank (Chief Yoon Jong-won) at the time of selling the Discovery Lime Fund. This is much lower than the disciplinary measures previously notified to the bank.
Following the 28th of last month, the Financial Supervisory Service held a sanction review committee for IBK for the second time and discussed sanctions against IBK. The Financial Supervisory Service decided to make a decision to IBK to suspend a partial suspension for one month and to impose a fine for negligence and make a recommendation to the Financial Services Commission.
At the time of the fund sale, I decided to suggest a cautionary warning to former chief executive Kim Do-jin, who was the head of IBK, and three months to reduce salary for the vice chief at the time. Prior to the sanctions hearing, the water level was lowered by one level from the censure warning notified to Mr. Kim.
As the view that this result is a barometer of disciplinary action in banking sectors prevail, there is a possibility that the disciplinary action against the heads of other banks facing sanctions will be lower than the previously notified level. On the 25th of this month, the Financial Supervisory Service is scheduled to initiate sanctions against Woori Bank (Chief Kwon Kwang-seok) and Shinhan Bank (Chief Jin Ok-dong).
The sanctions against the CEO of the financial sector are divided into five stages. From the censure warning, which falls under the third stage, employment in the financial sector is restricted for at least three years, and is classified as severe disciplinary action.
In 2017-2019, IBK sold the Discovery US Fintech Global Bond Fund and the Discovery US Real Estate Senior Bond Fund worth 3612 billion won and 318 billion won, respectively. This fund was designed by Discovery Management, a domestic manager, and mostly sold by IBK.
However, when a U.S. manager was accused of fraud, the assets were frozen and the bonds invested in the fund were not recovered. Currently, a total of 91.4 billion won has been delayed in repurchase, and the damage caused by the delay in repurchase has been passed on to investors.
The sanctions review is the advisory body of the FSS Commissioner, and the decision on the sanctions review has no legal effect. The results of the deliberation will be finalized through the approval of the FSS Commissioner, deliberation by the Securities and Futures Commission, and resolution by the Financial Services Commission.