Shinhan Bank’s CEO and Shinhan Financial Group’s Chairman received lighter punishments than expected over the Lime mis-selling scandal.
South Korea’s FSS (Financial Supervisory Service) has reportedly imposed lighter-than-expected punishments against Shinhan executives over the Lime Asset Management mis-selling scandal.
Shinhan Bank CEO Jin Ok-dong received a “cautionary warning”, one notch lower than the “reprimand warning” the FSS said he would receive. The reprimand warning would have prohibited Jin from working in the financial sector for three to five years after the end of any existing engagements.
Shinhan Financial Group Chairman Cho Yong-byoung received a “caution”, one notch lower than the “cautionary warning” anticipated – which was already considered a relatively light penalty.
“Caution” is the lightest punishment on the five-step scale the FSS uses. (The highest punishment is a recommendation for dismissal, followed by suspension from work.)
The FSS has also announced a three-month partial suspension of operations as well as a fine (undisclosed amount) against Shinhan Bank.
The decisions from the FSS are subject to approval from the FSC (Financial Services Commission).
The punishments were imposed for mis-selling of funds managed by Lime Asset Management, which has been under an FSS investigation since July 2019 for concealing losses and inflating investment returns.
Over KRW 1.6 trillion of Lime funds have been frozen since December 2019, according to data from the FSS, which has been mediating disputes between investors and the financial institutions that sold the funds.
Last week, the FSS recommended that Shinhan Bank settle all disputes with Lime investors at reimbursement rates of 40 to 80 percent.
The bank has since voted to accept the recommendation, which factored into the lighter punishments imposed by the FSS.
The FSS will hold more meetings later this month to determine the punishment for other Lime fund sellers, including KDB (Korea Development Bank) and Busan Bank.