First Disciplinary Hearing on the Optimus Scandal... NH Investment & Securities and Hana Bank Disciplinary Levels Under Close Watch

Will CEO Jeong Young-chae's Disciplinary Severity Be Reduced Following Advance Notice of 'Suspension'?

In front of the Financial Supervisory Service in Yeouido, Seoul, members of the People's Solidarity for Participatory Democracy are holding a press conference to request a public audit regarding the Financial Supervisory Service's supervisory negligence in the Optimus Fund fraud case. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kwangho Lee] On the afternoon of the 19th, the Financial Supervisory Service (FSS) held the first disciplinary committee meeting regarding the suspension of redemptions of the Optimus fund and decided the level of sanctions for NH Investment & Securities, the main distributor of the Optimus fund, and Hana Bank, the custodian.

NH Investment & Securities is the largest distributor of the Optimus fund, accounting for 43.27 billion KRW, or 84%, of the total 51.46 billion KRW in suspended redemptions.

Earlier, the FSS had pre-notified CEO Young-chae Jung of NH Investment & Securities of a three-month suspension from duty.

The level of sanctions for financial company executives is divided into five stages: 'recommendation for dismissal - suspension from duty - reprimand - cautionary warning - warning.' Among these, reprimand or higher is classified as a severe sanction, restricting reappointment and employment in the financial sector for 3 to 5 years.

It is also known that NH Investment & Securities has been notified of a severe institutional sanction.

Sanctions against financial companies are divided into five stages: 'cancellation of registration/authorization - suspension of business - corrective order - institutional warning - institutional caution,' with institutional warning and above generally classified as severe sanctions.

Accordingly, CEO Jung is expected to attend the disciplinary committee meeting to present opinions aimed at reducing the severity of the sanctions. He is likely to emphasize that the company actively pursued compensation for Optimus fund investors and directly reported the case to the prosecution to prevent further victimization.

Hana Bank, the custodian of the Optimus fund, is also reported to have been pre-notified of a severe sanction such as an 'institutional warning.'

However, only employees involved in Optimus-related work were notified of sanctions, and Hana Bank President Sung-kyu Ji was excluded from the sanctions.

Initially, the Korea Securities Depository, which acted as the administrative management company, was also pre-notified of severe sanctions but was excluded from the disciplinary committee's agenda on this day.

On the 17th, FSS Governor Seok-heon Yoon stated at the National Assembly's Political Affairs Committee plenary session, "Regarding the issue of sanctions on the Korea Securities Depository, the Board of Audit and Inspection is currently reviewing it, and we will follow their conclusion once it is made."

The disciplinary committee's resolution will be finalized after going through the Securities and Futures Commission under the Financial Services Commission and the Financial Services Commission's approval process. If dissatisfied with the finalized sanctions, one may file for a provisional injunction to suspend the effect of the sanctions and initiate administrative litigation.