Chairman Cho Yong-byeong Also Reduced One Level to 'Caution'
Disciplinary Committee Recognizes Shinhan Bank's Efforts to Compensate Victims
Jin Ok-dong, President of Shinhan Bank, is attending the second disciplinary review committee related to the 'Lime Private Equity Fund' incident held at the Financial Supervisory Service last March. [Image source=Yonhap News]
[Asia Economy Reporter Kwangho Lee] The Financial Supervisory Service (FSS) held a disciplinary committee meeting regarding Shinhan Bank, the seller of Lime Asset Management's private equity fund, and decided to impose a 'cautious warning' (moderate) disciplinary action on Jin Ok-dong, CEO of Shinhan Bank. This level is one step reduced from the 'reprimand warning' previously notified by the FSS. It is analyzed as a result reflecting post-management efforts such as agreeing to dispute resolution based on post-settlement methods using estimated damage amounts. Accordingly, CEO Jin can continue his third term or challenge for the financial holding company chairman position. Chairman Cho Yong-byeong of Shinhan Financial Group received a 'warning,' which is one level lower than the previous disciplinary action.
On the 22nd, the FSS held a disciplinary committee meeting and reviewed the disciplinary proposal for Shinhan Bank, which sold Lime funds worth 276.9 billion KRW, and resolved to impose a cautious warning on CEO Jin and a warning on Chairman Cho.
The disciplinary committee reached a conclusion after marathon deliberations past midnight on the 23rd. A committee official stated, "We listened thoroughly to statements and explanations from multiple company representatives and the inspection bureau, carefully examined facts and evidence, and conducted a very cautious and in-depth review."
After discussions, the committee decided that Shinhan Bank violated the Capital Markets Act due to incomplete sales of private equity funds and other financial investment products. CEO Jin was given a cautious warning, and the former deputy CEO was subjected to a three-month salary reduction. Additionally, the institutional disciplinary level for Shinhan Bank was decided as a three-month partial suspension of business and a fine, and the disciplinary proposal will be recommended to the Financial Services Commission. Regarding Shinhan Financial Group, Chairman Cho was given a warning for violating the Governance Act's obligation to establish internal control standards, and the holding company will be recommended for institutional warning and fines to the Financial Services Commission.
With the disciplinary level reduced by one step, CEO Jin has escaped disciplinary risk. The disciplinary levels for financial company executives are divided into five stages: dismissal recommendation, suspension of duties, reprimand warning, cautious warning, and warning. Among these, reprimand warning and above are considered severe disciplinary actions. If a severe disciplinary action is received, reemployment in the financial sector is prohibited for 3 to 5 years after the current term ends. Since CEO Jin was decided to receive a mild disciplinary action at the committee, he will not face such restrictions.
The reduction in disciplinary level for CEO Jin at the committee appears to have been influenced by Shinhan Bank's efforts to compensate victims. On the 21st, Shinhan Bank held an extraordinary board meeting and accepted the FSS Dispute Mediation Committee's compensation recommendation regarding the sale of Lime Asset Management's Credit Insured (CI) fund.
With the disciplinary reduction, CEO Jin can continue his third term or challenge for the financial holding company chairman position. Shinhan Bank can also alleviate concerns about leadership gaps. Chairman Cho has also been relieved of burdens as the disciplinary actions related to Lime sales have been concluded.
A Shinhan Bank official said, "We respect the disciplinary committee's decision and will strive to realize the basic rights of financial consumers and improve their interests going forward."
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