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Korea Investment & Securities faces 3.86B won fine for rule violations

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Korea Investment & Securities faces 3.86B won fine for rule violations

South Korea's Securities and Futures Commission decided to impose a fine of 3.86 billion won on Korea Investment & Securities Co. Ltd. for rule violations, including granting an unauthorized loan to its Vietnamese unit, KIS Vietnam Securities Corp.

The Financial Investment Services and Capital Markets Act prohibits investment banks from lending money to domestic and overseas units according to a May 23 release from the country's Financial Services Commission.

The commission found Korea Investment & Securities gave KIS Vietnam Securities Corp. a US$35 million loan for a one-year period from November 2016. The findings are based on an inspection conducted between May 8 and June 2, according to the release.

The commission also approved fines totaling 117.5 million won against Korea Investment & Securities for other rule violations, including its purchase of 169.8 billion won of privately placed bonds with money raised from the money market in February 2018. The bonds were issued by a counterparty to a total return swap deal involving an unnamed individual investor, the FSC said.

The Financial Investment Services and Capital Markets Act prohibits investment banks from lending to an individual borrower with money raised from the money market.

The Chosun Ilbo reported that the individual investor cited by the FSC is SK Holdings Co. Ltd. CEO Chey Tae-won.

As of May 22, US$1 was equivalent to 1,190.44 South Korean won.