‘DLF incomplete sale’ Hana Financial Vice Chairman Ham Young-joo appeals against the first trial

Hana Financial Group Vice Chairman Ham Young-joo, who was severely sanctioned for the loss of an overseas interest rate-linked derivative-linked fund (DLF), appealed against the judgment of the first trial that the financial authorities’ severe disciplinary action was justified.

According to the legal community on the 15th, representatives of Hana Bank and Vice Chairman Ham and others submitted an appeal to the 5th administrative division of the Seoul Administrative Court (Chief Judge Kim Soon-yeol) the day before.

On the 14th, Seoul Administrative Court’s 5th Administrative Division (Chief Judge Kim Soon-yeol) said, “The scale of losses due to incomplete sales is huge. The plaintiff lost the lawsuits filed by Hana Bank and Vice Chairman Ham and others against the financial authorities, including suspension of business.

The court acknowledged that Hana Bank sold 886 DLF products, saying that it did not sufficiently inform investors of the risks of the products and made ‘incomplete sales’. In addition, it was judged that “the management did not fulfill its duty to prevent incomplete sales while formally operating the compliance officer system and neglecting some of the bylaws without effectiveness.”

DLF is a fund that invests in derivative-linked securities (DLS) based on interest rates, exchange rates, credit ratings, etc. In the second half of 2019, as bond interest rates plummeted worldwide, principal losses occurred in DLS, which used US, UK, and German bond rates as an underlying asset, and DLF, which was invested in it.

At that time, on March 5, 2020, the financial authorities imposed sanctions and a fine of 16.78 billion won on Hana Bank for a six-month suspension (new sales of private equity funds). Vice-Chairman Ham, who was in charge of the president, was given a severe disciplinary action (reprimand warning) for failing to supervise management. Hana Bank and Vice Chairman Ham Ham were dissatisfied with the disciplinary action and filed an administrative lawsuit and applied for suspension of execution.