FSS reviews results of Goldman Sachs probeThe Financial Supervisory Service said yesterday it is analyzing the results of an inspection last month of the local unit of Goldman Sachs Group.
The regulator’s announcement was made after a media report in the morning stated that the FSS plans to seek a prosecutorial investigation into the investment firm for allegedly violating the capital market law.
“We have conducted an inspection of three foreign securities firms [including Goldman Sachs Group’s local operations] and are currently reviewing the results and related documents,” the FSS said in a statement.
Last month, financial authority sources confirmed the FSS is investigating three foreign brokerages for possible violations of capital market regulations.
The two others are the local units of Credit Suisse Group and the Royal Bank of Scotland.
As for Goldman Sachs, the FSS has been investigating whether it violated the law by selling financial products to Korean institutional investors through its Hong Kong unit, which does not have a license to sell products in Korea.
The capital market law requires overseas financial products be sold to local investors only through licensed Korean units.
The media report also stated that the FSS said it would seek cooperation from the financial authority in Hong Kong if necessary.
According to industry sources, from October last year through June, a total of $1.12 billion worth of products have been sold in the Korean market.
“We are cooperating fully with our regulator’s ongoing inspection and are unaware of any conclusions stemming from it,” said an official at the Goldman Sachs’ Korean unit yesterday.
Yesterday’s media report said the FSS suspects Goldman Sachs violated the country’s financial law, quoting a senior official as saying it has “secured” evidence.
The FSS, meanwhile, refused to elaborate on the issue.
“There are many reports stating that we will be asking the prosecution for an investigation, but nothing has been decided,” said an FSS official. “We haven’t reached the stage of deciding what legal action to take against [the local unit of Goldman Sachs] and what steps we’ll take in the future.”
The official said many FSS inspectors have been sent to join the team investigating Tongyang Group and that the review process concerning the Goldman Sachs unit will “take longer than expected.”
BY LEE EUN-JOO [firstname.lastname@example.org]