Employees of Shinhan Investment Corp. who concealed massive losses incurred during the trading of exchange-traded fund (ETF) futures products have been sentenced to prison in the first trial.
On June 26, Judge Yoo Jeonghoon of the Seoul Southern District Court's Criminal Division 7 sentenced Mr. Cho, an ETF liquidity provider (LP) at Shinhan Investment Corp., and Mr. Lee, the head of the department, each to three years in prison on charges including fraud. The court ordered their immediate detention, citing concerns they might flee.
Judge Yoo stated, "The losses suffered by the victim far exceed the amount the defendants received, and they exploited the victim's trust to obtain illegal funds. The nature of the crime is extremely serious, and there is no room for excuse." He added, "The damage has not been recovered, and there is no sign of any effort by the defendants to make restitution. The victims are petitioning for severe punishment, and strict sentencing is unavoidable."
In August of last year, Cho and Lee incurred losses of 128.9 billion KRW while purchasing ETF futures as the domestic stock market plummeted. However, they are accused of falsely registering in the electronic system that they had made a profit of 130 billion KRW through swap transactions.
They are also accused of manipulating 'management accounting' records, which are used to calculate performance bonuses, after incurring losses of 108.5 billion KRW while managing overseas ETF products in 2023. It was found that Cho and Lee received performance bonuses of 137.52 million KRW and 341.77 million KRW, respectively, through these methods.
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