Court suspends regulatory punishment on Hana vice chairman

Finance

Published: 24 Mar. 2022, 13:07 Updated: 24 Mar. 2022, 19:18

Court suspends regulatory punishment on Hana vice chairman

Hana Financial Group Vice Chairman Ham Young-joo speaks to the press after attending the first trial at the Seoul Western District Court on Friday where he was ruled not guilty of being involved in Hana Bank's illegal hiring practices that took place in 2015 and 2016. [YONHAP]

A Seoul court on Thursday agreed to temporarily suspend a regulatory punishment imposed on Hana Financial Group Vice Chairman Ham Young-joo.

The Seoul High Court granted a request from Ham to suspend the enforcement of the regulatory punishment, which was initially imposed by the Financial Supervisory Service (FSS) in 2020 for the improper selling of high-risk derivative-linked funds (DLF) from 2016 through 2019.

A Seoul Administrative Court upheld the punishment on March 14, concluding that Hana Bank had failed to properly protect investors from risky investments. Ham was given a month through April 13 until the regulatory punishment, which would bar him from taking a leadership position at a financial company for three years, goes into effect.

Ham has appealed the March 14 decision.

The Seoul High Court decision on Thursday suspends the regulatory punishment until 30 days after the appeals trial, assuming Ham loses the appeal.

Ham was the CEO of Hana Bank until March 2019 and has been nominated as the next chairman of Hana Financial Group. The appointment is set to be voted on at a shareholder meeting scheduled to take place on Friday.

The Seoul High Court ruling on Thursday acknowledged that if the punishment was not suspended ahead of the shareholder’s meeting, it could cause irrecoverable damage to Ham.

The suspension of the punishment cannot be seen to “impose significant impact on public welfare,” the ruling reads. This could mean the court will be more cautious about the legality of the ruling since compensation has already been made to affected DLF investors, according to legal experts.

The Thursday “ruling has created a favorable environment for Ham to appeal to shareholders” on his appointment as chairman at the shareholder’s meeting scheduled Friday, said Seong Hye-hwal, a professor who teaches law at Inha Law School.

In 2020, the Financial Services Commission accepted a Financial Supervisory Service recommendation to impose a "disciplinary warning" on Ham and Woori Financial Group Chairman Son Tae-seung for the improper selling of high-risk DLFs.

The two banks were selling products with the promise of high returns if interest rates in major economies stayed above a certain level. As rates fell in the United States, Britain and Germany, investors incurred heavy losses.

A request by Woori Financial Group Chairman Son to cancel a similar regulatory punishment was granted by the Seoul Administrative Court in August.

BY JIN MIN-JI [jin.minji@joongang.co.kr]