Korean FSS penalizes improper ELS sales linked to the Hang Seng China Enterprises Index
According to Korean media reports, the Financial Supervisory Service (FSS) of South Korea has decided to fine five banks, including Standard Chartered (2888), a total of about 600 billion won (about HK$3.07 billion) over losses caused by equity-linked securities (ELS) tied to the Hang Seng China Enterprises Index.
Disciplinary review result: total fines for five banks around 600 billion won
The FSS held a disciplinary review on Thursday morning (the 4th) and revisited the sanctions for the above improper ELS sales. It finally decided to set the total fine for KB Kookmin, Shinhan, Hana, NH NongHyup and Standard Chartered Korea at around 600 billion won.
Fine cut: down from more than 1.4 trillion won to less than one-sixth
The fine amount has been cut from the more than 1.4 trillion won proposed by the FSS in February to less than half of that. Compared with the roughly 4 trillion won initially estimated by the FSS after the incident, the current figure is even less than one-sixth.
FSS earlier finding: regulatory noncompliance and systemic failure
At the beginning of 2024, the FSS confirmed that five Korean banks and six securities firms had serious regulatory noncompliance and systemic failures in selling complex financial products linked to the Hang Seng China Enterprises Index. The FSS also said plainly that if the Hang Seng China Enterprises Index had remained at its early-2024 level, retail investors in the related ELS products would have lost 5.8 trillion won (then close to HK$34.5 billion), including many retirees.
The FSS said at the time that it would decide on fines and other regulatory actions based on how much financial firms compensate customers and how well they restore customer confidence.
(Reporter Lin Defen)
