[Infostock Daily=Reporter Hyo-Sun] A legal battle between Woori Financial Group Chairman Son Tae-seung and the Financial Supervisory Service over incomplete sales of Derivative Combined Fund (DLF) linked to overseas interest rates has begun in earnest.
On the morning of the 18th, the first hearing date for the cancellation of the Financial Supervisory Service's heavy punishment lawsuit filed by Chairman Sohn Tae-seung was held at the Seoul Administrative Court in Yangjae-dong, Seoul.
Chairman Son and FSS Governor Yoon Seok-hun did not attend the trial, but Chairman Son presented lawyers for Kim & Chang and six lawyers for Hwawoo, while the FSS presented lawyers for Chung Jung, a law firm, as legal representatives.
Chairman Sohn's side presented the interpretation of the Financial Company Governance Act related to the establishment of internal control norms and personal sanctions at the time of DLF sales, while the Financial Supervisory Service pointed out loopholes related to internal control of Woori Bank.
According to Article 24 of the Financial Companies Governance Act, financial companies should establish internal control standards to protect laws, sound management, and shareholders and stakeholders.
"When we launched DLF products in 2017, we could not predict the volatility of German government bonds, and we did our best to establish internal control standards (under Article 24 of the Financial Companies Governance Act) when the Financial Supervisory Service did not provide guidelines for internal control standards,” claimed Son's legal representative. In addition, CEO (Chairman Son Tae-seung) did not directly intervene in the decision to sell DLF products, so he also said that the FSS's disciplinary action was unfair.
On the other hand, the Financial Supervisory Service refuted that Woori Bank had caused incomplete sales of DLF products by pursuing a non-interest income expansion strategy without effectively establishing internal control standards.
The FSS's authority to reprimand is another major issue in the trial.
Earlier, the Financial Supervisory Service issued a warning to Chairman Sohn, judging that Woori Bank had poor internal control of its management in the background of incomplete sales of DLF products. Sohn filed a lawsuit against the Financial Supervisory Service for the suspension of execution and filed a lawsuit against the Financial Supervisory Service.
At the end of March, the court said that the authority to censure was interpreted as "in the Financial Services Commission."
On the same day, the court said, "The two sides seem to have different 'perspectives' in which they view internal control-related norms," adding, "The autonomy of financial companies and the supervisory authority of the Financial Supervisory Service are at odds, and there is no precedent related to this, so we need to think about it."
The court will proceed with the hearing, considering the complexity and influence of the case in depth. The next hearing is due at 3 p.m. on December 11.
Reporter Park Hyo-Sun email@example.com