FSS Regulatory Penalties on HSCEI-Linked ELS
According to Korean media reports, the Financial Supervisory Service (FSS) decided to impose a total fine of approximately 600 billion Korean won (about HK$30.7 billion) on five banks including Standard Chartered (2888) for losses caused by equity-linked securities (ELS) linked to the Hang Seng China Enterprises Index.
Penalty Plan: Total Around 600 Billion Won
The FSS held a sanctions review Thursday (4th) morning to rediscuss the sanctions plan for the above ELS misselling, and decided to set the total fine for five banks—KB Kookmin, Shinhan, Hana, NH Nonghyup, and Standard Chartered Korea—at around 600 billion won.
Fine Reduction: From Over 1.4 Trillion to Less Than One-Sixth
The fine amount has been reduced from over 1.4 trillion won proposed by the FSS in February this year to less than half. Compared with the initial FSS estimate of about 4 trillion won after the incident, the current scale is even less than one-sixth.
Previous FSS Assessment: Complex Product Compliance and Systemic Failure
In early 2024, the FSS confirmed that five Korean banks and six securities firms had serious regulatory non-compliance and systemic failures in selling complex financial products linked to the HSCEI. The FSS stated that if the HSCEI remained at early 2024 levels, retail investors in these ELS would lose 5.8 trillion won (then nearly 345 billion won), many of whom were retirees.
The FSS at that time said it would decide penalties and corresponding regulatory actions based on the amount of compensation paid by financial companies to customers and their efforts to restore customer confidence.
(Reporter Lin Defen)
