High court clears Hana chairman of penalty over DLF sales fiasco
An appellate court ruled in favor of Hana Financial Group Chairman
Ham Youngjoo Thursday concerning the improper selling of highrisk derivative-linked funds (DLFs) by the group’s flagship subsidiary, Hana Bank.
The Seoul High Court nullified a verbal warning imposed by the Financial Supervisory Service (FSS) against Ham in response to sales of DLFs in the late 2010s when Ham was the CEO of the bank.
A lower court found the warning appropriate in March 2022, holding him accountable for the lack of internal controls to curb the mis-spelling of the controversial funds. Ham appealed the ruling thereafter.
A verbal warning is detrimental, as those who receive it are barred from landing new jobs in the finance sector for at least three years. This is the third-highest level of punishment out of five available options for the FSS.
The Seoul High Court said Ham is not responsible for the bungled regulatory control of the bank.
“We respect and thank the court’s decision,” the company said in a press release, “We’ll consider the DLF case as a chance to serve our customers in a more thoughtful manner.”
It also said, “We will make sure that our internal control works effectively to maximize convenience for customers and other involved parties.”
The DLFs that caused controversy in the country were designed to provide high returns when the interest rates of major economies stayed above a certain level, but they ended up incurring massive losses for investors as the yields tied to the products plunged. The financial regulator had said that some bank heads were partially responsible.