Shinhan Investment Corp Also Corrects Business Report Due to 450 Billion Accounting Error

Shinhan Investment Corp.'s operating revenue (sales) for the second quarter of last year was found to have been inflated by about 450 billion KRW due to an error in calculating foreign currency transaction gains. This issue arose shortly after Korea Investment & Securities corrected its business reports for the past five years, prompting criticism over the sloppy accounting management of securities firms.

According to the Financial Supervisory Service's electronic disclosure system on the 3rd, Shinhan Investment Corp. amended its 2024 semi-annual report and third-quarter report on the 26th of last month. The foreign exchange transaction gains for the last year's half-year period decreased from 967.2 billion KRW to 511.9 billion KRW. Consequently, operating revenue also dropped by 45.53 billion KRW, from 8.9459 trillion KRW to 8.4905 trillion KRW.

Shinhan Investment Corp. explained that it made an exchange rate entry error during the internal foreign exchange transaction process in the second quarter of last year, which caused the foreign exchange transaction gains and the combined operating revenue to be inflated by about 450 billion KRW. However, because the foreign exchange transaction losses and operating expenses also decreased due to internal transactions, operating profit and net profit were not affected.

Criticism has been raised inside and outside the industry regarding the consecutive accounting errors by securities firms. It is pointed out that securities firms, which manage investors' funds, are making absurd mistakes and damaging trust in the capital market. Previously, Korea Investment & Securities also inflated its sales by about 5.7 trillion KRW due to errors in the internal foreign exchange transaction process, leading to corrections of business reports for the past five years. This, too, had no impact on net profit due to internal transactions.

The Financial Supervisory Service has already begun an accounting review of Korea Investment & Securities. Regarding this, Ham Yong-il, Deputy Governor of the Financial Supervisory Service, confirmed in a briefing this week, "We have started an accounting review," and added, "We will examine the scale and ratio of sales and intentionality, and it may be escalated to an audit." A securities industry official noted, "It cannot be ruled out that similar cases may exist in other securities firms."