Shinhan Financial Investment Penalized for Improper Fund Sales: 6-Month Fund Sales Ban and 4.1 Billion KRW Fine Imposed

More than 20 Current and Former Executives Also Sanctioned

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Shinhan Financial Investment, found guilty of unfair fund sales, has been banned from selling funds for six months and fined 4.1 billion KRW. About 20 current and former executives and employees will also face sanctions.

According to the financial industry on the 9th, the Financial Supervisory Service's comprehensive and sector inspections of Shinhan Financial Investment revealed violations of the Act on Capital Market and Financial Investment Business (Capital Market Act). As a result, Shinhan Financial Investment will face a six-month suspension of some operations, including private equity funds, and a fine of 4.088 billion KRW. Twenty-four current and former executives and employees, including two former executives, received sanctions of up to a three-month suspension.

Shinhan Financial Investment was found to have engaged in unsound business practices, such as concealing the insolvency of the Lime Trade Finance Fund, and providing false or uncertain information to investors, constituting unfair solicitation. Additionally, it violated the prohibition on unfair solicitation regulations during the sale of German Heritage Derivative Linked Securities (DLS). Of the approximately 4.1 billion KRW fine, 1.8 billion KRW is related to the 'Lime incident.'

Furthermore, violations were confirmed, including losses caused by poor management of the Home Trading System and Mobile Trading System, illegal promotion of specific money trusts, failure to provide mandatory explanatory documents, and restrictions on executives and employees trading financial investment products.

KB Securities and Daishin Securities also received sanctions related to the Lime incident on the 2nd and 3rd, respectively. The sanctions against these three companies were revealed through comprehensive or sector inspections and were limited to violations of the Capital Market Act. The financial authorities decided to determine sanctions for violations of the 'Act on Corporate Governance of Financial Companies' in the future, depending on the progress of litigation.