Securities Firm CEO Replacement Gale... Impact of Risk Management Failures and Generational Change

CEO Terms Expire at 9 of the Top 10 Securities Firms

This year, there is a strong wave of CEO replacements in domestic securities firms. With many CEOs' terms expiring at the end of this year and in March next year, they are facing a replacement storm influenced by risk management failures and generational changes.

According to the financial investment industry on the 22nd, among the top 10 domestic securities firms, the terms of CEOs at nine firms will expire early next year. Among them, seven CEOs have either been replaced or are in situations where reappointment is impossible.

Regarding the Lime and Optimus private equity fund scandals, KB Securities CEO Park Jeong-rim, who received severe disciplinary action from financial authorities, is practically unable to be reappointed. The Financial Services Commission has issued a suspension order against CEO Park. The suspension restricts employment at financial companies for four years. NH Investment & Securities CEO Jeong Young-chae received a reprimand. The reprimand also restricts employment at financial companies for three years. Both have filed lawsuits to cancel the disciplinary actions and requested suspension of execution.

On the 14th, KB Financial Group held the Subsidiary CEO Candidate Recommendation Committee (Daechuwi) and recommended Lee Hong-gu, Vice President of the WM Sales Headquarters, as Park's successor. The Seoul Administrative Court recently accepted CEO Park's request for suspension of the execution of the suspension order. If they win the administrative lawsuit, there will be no problem with employment as a financial executive. For CEO Jeong, a decision on whether to accept the suspension of execution of the reprimand will be made on the 27th. If approved, reappointment is not entirely impossible.

Kiwoom Securities, which was embroiled in stock price manipulation incidents such as the Ra Deok-yeon incident and the Youngpoong Paper lower limit incident this year, also replaced its CEO. CEO Hwang Hyun-soon stepped down, and Vice President Eom Ju-seong was appointed as the new CEO.

Many securities firms have also made CEO appointments as part of generational change. Choi Hyun-man, a founding member of the Mirae Asset Group and CEO of the securities division for seven years, retired voluntarily. Mirae Asset Securities appointed Vice Presidents Kim Mi-seop and Heo Seon-ho. Long-serving CEOs such as Choi Hee-moon, Vice Chairman of Meritz Securities (four terms), and Jeong Il-moon, CEO of Korea Investment & Securities (five terms), also stepped down. Meritz Securities appointed CEO Jang Won-jae, and Korea Investment & Securities appointed CEO Kim Seong-hwan. Samsung Securities also saw CEO Jang Seok-hoon, who held the position for six years, leave, with Park Jong-moon, head of Samsung Life Asset Management, newly appointed.

Hong Won-sik, CEO of Hi Investment & Securities, whose term expires in March next year, also seems unlikely to be reappointed. Due to a notably large decline in sales among small and medium-sized firms, the view that reappointment is difficult is strong. Additionally, controversy over real estate project financing (PF) 'kickbacks' is another obstacle. He was even summoned as a witness to the National Assembly's Financial Services Commission audit on October 11 due to suspicions of real estate PF kickbacks.

Daishin Securities CEO Oh Ik-geun is highly likely to be reappointed. Daishin Securities is regarded as having avoided risks such as Contracts for Difference (CFD) and real estate PF this year. The disciplinary level against Vice Chairman Yang Hong-seok of Daishin Securities related to the Lime fund sales was reportedly lowered from a reprimand to a cautionary warning, which also influenced the situation. Shinhan Investment Corp. CEO Kim Sang-tae succeeded in reappointment. The Shinhan Financial Group subsidiary CEO Candidate Recommendation Committee (Jagyungwi) decided to extend Kim's term by two years until December 2025. This drew attention as it broke the convention of granting one-year terms upon reappointment. Kang Seong-mook, CEO of Hana Securities, who took office earlier this year, was the only one to avoid reappointment issues amid the personnel shakeup. His term lasts until the end of next year. Hwang Jae-taek, CEO of Hanyang Securities, is also expected to be reappointed. This year, CEO Hwang focused on managing real estate PF risks and reduced contingent liabilities to 0%.