Formation of Internal Control TFT... Executive Meeting Held
Emphasized "Sophisticated Management is Important Going Forward" in Private
First Mention of 'Principled Management' in This Year's New Year's Address
Im Jae-taek, CEO of Hanyang Securities, has been driving 'strengthening internal controls' since the beginning of the year. While last year focused on reducing risks in real estate project financing (PF), this year he has ordered a company-wide internal control inspection. This is interpreted as a commitment to align with the financial and regulatory authorities' stance.
According to the financial investment industry on the 12th, Hanyang Securities recently formed a 'Task Force Team (TFT) for Preventing Financial Accidents such as Embezzlement and Breach of Trust' and held its first executive meeting chaired by CEO Im Jae-taek. The TFT was created to maximize the effectiveness of internal controls amid ongoing financial accidents in the securities industry.
The TFT will inspect internal control issues across the entire company. The inspection will last for a total of four weeks and may be extended if necessary. The inspection will be conducted in order of urgency and importance. At the first meeting, CEO Im reportedly emphasized to the executives, "Please inspect everything within the current systems or operations that could cause financial losses to customers or the company due to individual deviations (embezzlement or breach of trust)."
The TFT is divided into verification members and working members. Verification members include the heads of the Management Planning Division, Management Support Division, Management Planning Office, Risk Management Office, and the Compliance Officer. Working members consist of all heads of support departments. The working members determine the items to be inspected, prepare inspection materials for related departments, and then the department heads supplement the contents for verification.
Inside and outside Hanyang Securities, it is explained that CEO Im prioritizes internal control issues as the number one management goal. In his New Year's address this year, he mentioned 'principle-centered management' first. He stated, "Maximizing profits should not become Hanyang Securities' ultimate task," and added, "We must become a securities company that is morally excellent and of the highest dignity."
This stance has continued since last year. In his New Year's address last year, CEO Im also said, "(The securities company) organization must be ethically and morally excellent," setting 'leaping to a dignified securities company' as a management goal. At that time, it was mentioned as the third management goal, but this year internal control issues have been placed first. He reportedly said in a private meeting early this year, "Going forward, securities company CEOs must focus on sophisticated management. They should not be simply obsessed with internal control issues but must consider ensuring that management ethics are a prerequisite when working, regardless of rank or status."
The industry interprets this as a move aligned with the Financial Supervisory Service's (FSS) stance on 'strengthening internal controls.' FSS Governor Lee Bok-hyun stated in his New Year's address this year, "We will inspect the adequacy of internal regulations to establish sound governance and secure the effectiveness of internal controls in financial companies to prevent financial accidents in advance."
A securities company official said, "Unlike some securities companies recently found to have illegal activities through the FSS's PF planned investigations, Hanyang Securities is free from related issues as it does not even have PF contingent liabilities," adding, "It appears they intend to preemptively block issues monitored by the authorities through strengthening internal controls."
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