Financial Services Commission Decides 'Severe Disciplinary Action' Against Sohn Tae-seung, Chairman of Woori Financial Group... Reappointment 'Red Light' (Comprehensive)

[Asia Economy Reporter Song Hwajeong] The Financial Services Commission has decided to impose a 'reprimand warning' disciplinary action on Sohn Tae-seung, Chairman of Woori Financial Group, in connection with the incomplete sale of Lime funds. With the confirmation of this severe disciplinary action, a red light has been turned on for Chairman Sohn's reappointment.

On the 9th, at the 20th regular meeting, the Financial Services Commission resolved to impose a three-month partial suspension of business and a reprimand warning equivalent to that for retired executives regarding illegalities found in the Financial Supervisory Service's inspection results related to Woori Bank's incomplete sale (improper solicitation, etc.) of Lime funds. This comes about one year and six months after the Financial Supervisory Service's Sanctions Review Committee decided on a severe disciplinary action equivalent to a 'reprimand warning' for Chairman Sohn in April last year concerning the Lime fund incident.

The partial suspension of business is a sanction for incomplete sales, suspending new sales of private equity funds for three months. Sanctions on executives and employees delegated to the Financial Supervisory Service Commissioner will be handled by the Financial Supervisory Service. A total fine of 7.66 billion KRW for violations found in the inspection, such as failure to provide explanatory documents and violations of investment advertising regulations, was already imposed in July after approval by the Financial Services Commission.

The Lime incident occurred in July 2019 when suspicions arose that Lime Asset Management was manipulating returns through illicit transactions of convertible bonds (CB) of KOSDAQ companies, causing the stock prices in funds managed by Lime Asset Management to plummet and leading to a suspension of redemptions.

With Chairman Sohn receiving a severe disciplinary action, a red light has been lit for his reappointment. The level of sanctions for financial company executives is divided into five stages: 'recommendation for dismissal - suspension of duties - reprimand warning - cautionary warning - caution,' and a reprimand warning or higher corresponds to a severe disciplinary action that restricts employment in financial companies for 3 to 5 years.

However, the possibility of reappointment is not entirely ruled out. Industry insiders expect Chairman Sohn to file an administrative lawsuit related to this disposition, similar to the disciplinary action concerning the overseas interest rate-linked derivative-linked funds (DLF). If Chairman Sohn files for a provisional injunction and the court grants it, the effect of the Financial Services Commission's disciplinary action will be temporarily suspended, and if he succeeds in reappointment during this period, he can continue his term until the severe disciplinary action is confirmed through a future court ruling. Previously, Chairman Sohn filed a lawsuit to cancel the disciplinary action after receiving a reprimand warning from the Financial Supervisory Service for violating the Governance Act related to the DLF incident and won up to the second trial.

Regarding the resolution of the sanctions, Woori Bank stated, "There are currently no confirmed matters regarding future response plans, and we will carefully review related contents and respond accordingly," adding, "Regardless of this decision, Woori Financial Group will do its best to stabilize the financial market quickly and overcome the national economic crisis."