Would the Ministry of Finance, Lime Fund, come up with an opinion to reduce sanctions on our sales? 25th Sanctions Trial

The Financial Supervisory Service’s Sanctions Deliberation Committee (sanctions) will be held on the 25th for Woori Bank and Shinhan Bank, which sold Lime Asset Management funds, which caused a large-scale redemption suspension. Among them, attention is focused on the results of the sanctions review as the Financial Supervisory Service’s Financial Consumer Protection Office is likely to issue an opinion on reducing the level of sanctions by evaluating Woori Bank’s efforts to reimburse the fund principal.

According to the financial authorities and the financial sector on the 7th, the Financial Supervisory Service issued a notice of preliminary sanctions based on the results of sector inspections on Woori Bank and Shinhan Bank to “suspend the job” to Woori Financial Group Chairman Son Tae-seung at the time the fund was sold. A’cautionary warning’ was notified to the bank manager and a’cautionary warning’ to Shinhan Financial Group Chairman Cho Yong-byeong.

The level of sanctions on financial company executives is divided into five stages: △recommended for dismissal △recommended △responsibility warning △cautionary warning △caution. Actions against Chairman Son and Chairman Jin correspond to severe disciplinary action. If this sanction is finalized, re-employment in the financial sector is prohibited for the next three to five years after the end of the current term of office. The level of sanctions is determined through a resolution of the Financial Services Commission after a sanctions review.

The Financial Supervisory Service held these CEOs accountable for violating their obligations to establish internal control standards and causing incomplete sales. Woori Bank sold the Lime Fund worth 357.7 billion won, the highest among the sales by company. Shinhan Investment and Shinhan Bank sold Lime Fund at KRW 324.8 billion and KRW 2769 billion.

In May of last year, the’Regulation on Inspection and Sanctions for Financial Institutions’ was revised so that when the financial authorities decide the level of sanctions, it is possible to reflect the efforts to deal with them, including sufficient compensation. In addition, the organizational management regulations have been prepared so that the Financial Services Bureau of the Financial Supervisory Service can submit opinions on this matter for sanctions.

In the case of Woori Bank, after accepting the FSS’ Dispute Mediation Committee’s recommendation for compensation in full in relation to the Lime Trade Finance Fund, whose redemption was stopped due to fraud in September last year, it returned the investment principal to virtually all investors. In June of the same year, it was decided to prepay up to 51% of the principal of each fund to investors in relation to other Lime funds such as Pluto and Thetis. It is also responding to dispute settlement procedures for Lime Funds with unconfirmed losses.

An official from the Financial Supervisory Service said, “We are collecting data on what kind of consumer protection efforts were made by Woori Bank and how the damage relief was accomplished,” and said, “We will evaluate and give opinions about the sellers who worked hard to relieve the damage.” However, he explained that “the sanctions judges will comprehensively judge the materiality of the matter, as well as efforts to relieve damage.”

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