 |
Photo = Financial Supervisory Service |
[Alpha Biz= Paul Lee] The Financial Supervisory Service (FSS) has reduced the disciplinary action against Ham Young-joo, Chairman of Hana Financial Group, from a "severe reprimand" to a "cautionary warning" related to the overseas-linked derivative-linked fund (DLF) loss incident. This change means that Ham, who is set to be re-elected at the upcoming general shareholders' meeting on the 25th, has cleared the disciplinary risk.
According to financial authorities on Tuesday, the FSS announced on the 26th of last month that it had decided on the revised measures for Hana Bank, Ham, and 18 employees regarding the DLF issue. As a result, Ham's penalty was downgraded from a "severe reprimand" to a "cautionary warning," while former deputy chairman Jang Kyung-hoon’s penalty was reduced from a three-month suspension to a three-month salary reduction.
The reasons for the measures against Hana Bank and its employees were also altered, following the Supreme Court’s dismissal of the administrative lawsuit related to the DLF case in July of last year, which sided with Hana Bank.
DLF (Derivative-Linked Fund) is a fund that invests in derivative securities (DLS) based on assets such as interest rates and exchange rates. The fund, sold by Hana Bank, led to significant principal losses starting in June 2019 due to a global decline in bond rates.
Financial authorities concluded that Hana Bank had failed to establish adequate internal control guidelines, leading to incomplete sales of the funds and obstructing inspection tasks by providing false documents, resulting in a suspension of new private equity fund sales for six months and a fine of 16.78 billion KRW. Furthermore, they imposed a severe reprimand on Ham and a three-month suspension on former Deputy Chairman Jang.
Ham and Jang filed an administrative lawsuit to cancel the financial authorities’ penalties in June 2020. In February of last year, the appellate court overturned the initial ruling and partially ruled in favor of the plaintiffs, recognizing only two out of ten detailed reasons for the violation of the internal control obligation, instead of seven as initially judged.
However, the appellate court upheld the disciplinary measures on Hana Bank for incomplete sales and obstruction of the FSS’s inspection tasks. Despite the financial authorities appealing the decision, the Supreme Court confirmed the appellate court's ruling in July through an order of dismissal.
As the final penalty from the FSS has been reduced, Ham now faces less risk regarding the DLF issue ahead of the upcoming general shareholders’ meeting. Earlier, the Hana Financial Group's nomination committee recommended Ham as the final candidate for the next chairman, and Ham is expected to be officially appointed as Hana Financial Group's next chairman after the board meeting at the end of March.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
