The Financial Supervisory Service imposed severe disciplinary actions on securities firms that operated bond-type wrap accounts and specific money trusts, transferring customer profits and losses to other customers through illegal wash trades.
According to the financial investment industry on the 27th, the FSS decided to impose partial business suspension sanctions on KB Securities and Hana Securities at the Disciplinary Committee meeting held that afternoon.
Severe disciplinary measures were decided for the operating executives of both companies, while supervisory personnel, including KB Securities CEO Honggu Lee, received a mild disciplinary warning.
The supervisors were included in the sanctions for negligence in supervision or participation in decision-making during the process of using the securities firms' proprietary assets to compensate for customers' investment losses.
Earlier, the FSS uncovered during an inspection that portfolio managers from nine securities firms, including Hana Securities and KB Securities, had transferred profits and losses between customer accounts through illegal wash trades to achieve target returns on maturing accounts.
These securities firms engaged in rolling over new customer funds to guarantee returns for certain institutions and corporations or compensated some losses using the company's proprietary funds.
The disciplinary committee members agreed on the gravity and seriousness of the violations and deliberated severe disciplinary actions against the institutions and related parties. The final level of discipline will be confirmed through the Securities and Futures Commission and the Financial Services Commission.
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