Financial authorities have decided to impose sanctions on Shinhan Financial Investment, KB Securities and Daishin Securities in connection with the Lime Asset Management scandal that caused the suspension of private equity fund repurchase worth 1.6 trillion won in 2019.
It has been a year since the Financial Supervisory Service handed over the results of the sanctions review committee to the Financial Services Commission in November last year.
At a regular meeting on the 12th, the Financial Services Commission voted to take disciplinary action against the three companies for violating the Capital Markets Act. The Financial Services Commission has imposed penalties on these three securities firms, suspended some of their operations (Shinhan and KB), and closed their branches (Daeshin).
Under the decision, Shinhan Investment Corp. and KB Securities Co. will not be able to sell new private equity funds over the next six months.
Shinhan Investment cannot sign a new gross income swap (TRS) contract with a professional private equity fund for the next half year. New contracts for specific money trusts incorporating foreign funds and related derivatives will also be blocked for six months.
Shinhan Investment & Securities and KB Securities were fined 1.8 billion won and 550 million won, respectively, for engaging in unsound business practices related to total return swap (TRS) transactions.
Shinhan Financial Investment was suspended for six months, suspended for three months, and dismissed from its duties. KB Securities was also fined 144 million won for receiving financial advisory fees from the issuer even though it did not provide actual advice during the TRS transaction process.
Banpo WM Center, which was selected as the core selling point of Daishin Securities'Lime Fund, will be closed. The Financial Services Commission has also taken considerable measures to dismiss related employees.
Reporter Lee Ji-sun stockmk2020@gmail.com
