FSS investigating Goldman SachsKorean financial regulators are investigating three foreign brokerages, including Goldman Sachs Group’s local unit, for possible breach of domestic capital market regulations, a source at one of the regulators said.
The Financial Supervisory Service (FSS) is investigating whether Goldman Sachs sold foreign bonds in the domestic market through its Hong Kong unit, which does not have any license to sell such products directly in Korea, the source said yesterday.
The source declined to be identified due to the sensitivity of the subject and because the probe is still ongoing. The FSS said on Sunday that it was reviewing three foreign brokerages, without identifying them in its brief statement. The regulator is investigating their business practices to see if they are following domestic capital markets regulations, according to the statement. Goldman Sachs representatives in Seoul declined to comment.
Regulators are focusing their review on Goldman’s sales of Malaysian state-backed securities to domestic investors including Korea Investment Corp., the country’s sovereign wealth fund, according to the source.
The local operations of Credit Suisse and the Royal Bank of Scotland are the other two foreign brokerages being investigated, the source said. Credit Suisse and RBS were not immediately available for comment. The probe began in late August and is expected to last another week or so, according to the source.