The Financial Supervisory Service will refer securities firms suspected of misselling Homeplus Co. asset-backed short-term bonds (ABSTB, also called short-term electronic bonds) to the sanctions review committee on the 15th of this month. The committee is expected to review whether the firms properly followed the sales principles under the Financial Consumer Protection Act in the sales process and to determine the level of sanctions accordingly.
According to financial authorities on the 8th, the Financial Supervisory Service (FSS) is preparing a sanctions review on the 15th for Shinyoung Securities, Hana Securities, Hyundai Motor Securities and other securities firms that sold Homeplus Co. short-term electronic bonds. The sanctions review is a process that deliberates whether to impose sanctions and at what level for violations of laws by financial companies.
The Homeplus Co. short-term electronic bond is an asset-backed short-term bond issued by a special purpose company (SPC) with Homeplus Co.'s card purchase receivables and other assets as the underlying assets. Shinyoung Securities led the issuance of ABSTB based on Homeplus Co.'s commercial paper (CP), short-term electronic bonds, and card payment receivables, and sold them to investors and other securities firms. Hana Securities and Hyundai Motor Securities are suspected of misselling in the process of acquiring the short-term electronic bonds from Shinyoung Securities and selling them to individual investors.
The Financial Supervisory Service (FSS) tallied the outstanding Homeplus Co. short-term electronic bonds issued from Dec. 2024 to Feb. last year at 401.92 billion won. Of this, purchases by individual investors amounted to 177.7 billion won.
The key question for the Financial Supervisory Service (FSS) is whether the securities firms adequately explained the product's structure and risks to individual investors. The sanctions review is expected to focus on whether the suitability and appropriateness principles and the duty to explain under the Financial Consumer Protection Act were properly observed. It will likely examine not only whether the product was recommended in consideration of the investor's investment objective, financial situation and investment experience, but also whether the product's structure, credit risk and the possibility of principal loss were explained in a way investors could understand.
If misselling is confirmed, the Financial Supervisory Service (FSS) can consider imposing institutional and staff sanctions and a penalty surcharge under relevant laws. However, the specific level of sanctions is expected to be determined by the review committee after weighing the facts, the degree of violations, and the scope of responsibility by company.