The Financial Supervisory Service finished on-site inspections of Shinhan Investment and Kiwoom Securities, which issued and sold JTBC corporate bonds. The Financial Supervisory Service is expected to determine the level of sanctions after reviewing whether proper procedures were followed in the issuance and sale process.
As of the 27th, according to the securities industry, the Financial Supervisory Service finished on-site inspections of Shinhan Investment and Kiwoom Securities related to the issuance and sale of JTBC corporate bonds on the 24th. The Financial Supervisory Service began its inspection on the 2nd and had planned to inspect Shinhan Investment through the 10th, but extended it by a total of two weeks and wrapped up on the 24th. Kiwoom Securities was reportedly inspected for one week.
The Financial Supervisory Service will draft an inspection report and then decide the level of sanctions against Shinhan Investment and Kiwoom Securities. The industry expects regulators to focus on whether Shinhan Investment, the lead manager, sufficiently examined the issuer's financial condition and repayment capacity during JTBC's bond issuance. For Kiwoom Securities, the seller, the key question is likely to be whether risks were properly disclosed to retail investors and whether there was any misselling.
Earlier, JTBC corporate bonds were issued and sold up to just before JoongAng Group filed for rehabilitation, prompting questions about the responsibility of the brokerages involved. Shinhan Investment issued 93 billion won in JTBC corporate bonds in Feb. At the time, JTBC's credit rating was "BBB," the lowest tier within investment grade. Kiwoom Securities sold asset-backed electronic short-term bonds (ABSTB) to retail investors.