Gyeongnam Bank Caught for Embezzlement and Illegal Nominee Transactions

Branch Manager Opens Account Under Another Name and Trades Stocks
Fails to Fulfill Duty to Explain When Selling Private Equity Funds

BNK Gyeongnam Bank faced sanctions from financial authorities due to illegal nominee transactions by an employee, following an embezzlement incident involving 300 billion KRW. On the 27th, the Financial Supervisory Service announced that on the 21st, it imposed an institutional warning and a fine of 110 million KRW on Gyeongnam Bank for incomplete private equity fund sales and illegal nominee transactions by an employee.

A, a former branch manager of Gyeongnam Bank, conducted stock trading 193 times over 53 days from April 2018 to July 2020 through an account under his mother-in-law’s name, not his own. The total trading amount was 213.3 million KRW, with an investment principal of 40.8 million KRW.

A unauthorizedly opened two securities accounts linked to the mother-in-law’s account at the branch where he worked. He copied and reused a resident registration card to fabricate that the mother-in-law had requested the account opening. He also stamped his own seal on the customer signature fields.

A violated the obligation to notify quarterly trading statements seven times related to these transactions.

From March to August 2019, Gyeongnam Bank sold 207 private equity fund products worth a total subscription amount of 37.63 billion KRW to 195 general investors across 63 branches, failing to properly fulfill explanation duties.

Other violations included failure to report collateral loans exceeding 20% equity securities and failure to ensure the safety of electronic financial transactions, which were also included in the sanctions.

Meanwhile, in September, a senior executive managing real estate project financing (PF) at Gyeongnam Bank was prosecuted for an embezzlement incident involving a total of 308.9 billion KRW.