Financial Supervisory Service Imposes Institutional Warning and Fine on Samsung Securities for Violations Including Prohibition of Credit Extension

[Asia Economy Reporter Lee Jung-yoon] The Financial Supervisory Service (FSS) has imposed sanctions on Samsung Securities for violating the prohibition on credit extension to executives of affiliated companies.

According to the financial sector on the 9th, the FSS imposed a supervisory warning, a fine of 3.324 billion KRW, and a penalty of 1.1836 billion KRW on Samsung Securities for violations including the prohibition on credit extension to executives of affiliated companies, failure to submit business reports, and violation of the prohibition on unsound underwriting practices. Additionally, 25 executives and employees received disciplinary actions such as suspension, salary reduction, and warnings.

Samsung Securities was found to have provided stock-collateralized loans and credit financing to executives of affiliated companies who are special related parties of the major shareholder. Although it received prior notification from the Korea Securities Depository regarding the effective date of stock exchange for overseas stocks, it was found to have neglected its duty as a prudent manager by failing to complete rights adjustments on the effective date and lifting sales restrictions.

Furthermore, it was pointed out that false or omitted information was included in the business reports submitted to the Financial Services Commission. Also, while performing the role of lead manager for an initial public offering, some stocks acquired were disposed of on the 30th day from the listing date, violating related regulations. Some branches also sent investment advertisements via text messages or emails without obtaining confirmation from compliance officers.

In addition, some branches were found to have solicited investments from general investors without confirming the verification items on the investor information confirmation form while selling ultra-high-risk grade funds.