The Financial Supervisory Service (FSS) has decided to appeal against the court’s ruling in the first instance to revoke the severe disciplinary sanctions against Woori Financial Group Chairman Son Tae-seung in relation to the insolvent sales of Woori Bank’s overseas interest rate-linked derivative-linked funds (DLFs).
The Financial Supervisory Service (FSS) announced on the morning of the 17th that it would make this decision and submit an appeal to the court through the ‘briefing about appeals against Woori Bank’s DLF 1st instance judgment’.
An official from the Financial Supervisory Service said, “As a result of internal review and legal advice, we have decided to appeal after comprehensively considering the need to receive an additional judgment from the court on the reasons for the individual disposition and the ongoing litigation with Hana Bank on the same issue.” said. “The decision to appeal was made after consultation with the Financial Services Commission,” he added.
Since the FSS was officially served on the 3rd of last month, it must decide whether to appeal by this day, which is within 14 days. Meanwhile, the Financial Supervisory Service has been contemplating whether or not to appeal. This is because whether or not to appeal is directly related not only to the ongoing lawsuit against Hana Financial Group Vice Chairman Ham Young-joo for the cancellation of heavy disciplinary action, but also to similar lawsuits and the results of sanctions in the future.
An official from the Financial Supervisory Service said, “Independent of the appeal, we will actively communicate with the financial market and support financial supervision.
He added, “We will operate pre- and post-supervision in a harmonious way so that crisis situations can be prevented in advance and consequential sanctions can be minimized.”
DLF is a fund that invests in derivative-linked securities (DLS) based on interest rates, exchange rates, and credit ratings. In the second half of 2019, as bond yields plummeted globally, large-scale principal losses occurred in DLS and DLF linked to bond rates in the US, UK, and Germany.
Last year, the Financial Supervisory Service (FSS) imposed severe disciplinary action against Chairman Son and Woori Bank Senior Vice President Chung Chae-bong (head of sales and individual group division) for causing damage to customers due to the failure to properly control internal control during the sale of DLF. If you receive a censure warning, you will not be able to find employment in the financial sector for three consecutive years. At the time, Chairman Son countered by filing a lawsuit against the head of the Financial Supervisory Service for cancellation, such as a reprimand warning, and on the 27th of last month, the Seoul Administrative Court upheld Son’s hand.
The court said, “Out of the five reasons for the FSS’s sanctions, only ‘violation of the obligation to prepare a financial product selection procedure’ is recognized, and all other four reasons are not recognized, so the FSS’s sanctions cannot be maintained as it is, so it is illegal.” Sanctions corresponding to one reason should be reinstated,” he said.
By Kim Tae-rim, staff reporter tae@hankyung.com
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