SEOUL (Reuters) – South Korea’s monetary market watchdog stated on Monday it has discovered wrongdoings by monetary corporations promoting derivatives linked to a Hong Kong inventory market index.
“The inspection consequence reveals there was poor administration of gross sales coverage and client safety, incomplete gross sales on the system stage and varied sorts of incomplete gross sales in particular person instances,” the Monetary Supervisory Service (FSS) stated, after two months of investigating 11 monetary corporations.
The structured notes observe the efficiency of the Cling Seng China Enterprises Index and promise bond-like coupons except the index drops beneath a sure stage. Its sharp drop early this yr has prompted large losses for retail buyers.
The FSS stated it might punish wrongdoings in funding product gross sales in keeping with legislation, equivalent to via sanctions and fines, whereas every agency’s effort for compensating buyer losses would even be taken into consideration.
Along with the investigation consequence, the watchdog supplied a tenet for monetary corporations on voluntary compensation to buyers for his or her losses. The quantity of compensation will fluctuate case by case, relying on every agency’s accountability and investor traits, it stated.
The FSS stated buyers have misplaced 1.2 trillion gained ($911 million) out of two.2 trillion gained that matured in January and February, and it expects an extra lack of 4.6 trillion gained this yr if the index stays on the present stage.
($1 = 1,318.2600 gained)
(Reporting by Jihoon Lee; Enhancing by Josie Kao)
