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[Alpha Biz= Kim Jisun] On June 9, South Korea’s Financial Supervisory Service (FSS) announced disciplinary actions against the current and former executives of six securities firms for violations related to the improper payment of performance-based bonuses to employees handling real estate project financing (PF) and other financial investment operations.



The firms under scrutiny—Samsung Securities, Shinhan Investment, Kyobo Securities, Hana Securities, Yuanta Securities, and IBK Investment & Securities—were found to have breached regulations regarding deferred compensation during the 2018–2022 fiscal years. The FSS imposed warnings or cautionary reprimands on the executives involved, many of whom have since retired.



According to Korea’s Financial Holding Companies Act and related enforcement decrees, financial institutions must defer at least 40% of performance-based bonuses to executives and key investment personnel over a minimum of three years. Additionally, payments made early in the deferral period should not exceed pro-rata amounts.



Key findings include:

Samsung Securities failed to observe the minimum deferral period by paying bonuses over one to two years to 55 employees and paid lump-sum bonuses to 37 employees, violating the 40% deferral rule. Seven employees also received initial payments exceeding the regulatory cap.

Shinhan Investment paid bonuses in full to 23 staff members in 2018, despite being required to defer portions of those payments.

Kyobo Securities delegated discretion over bonus payments to department heads, bypassing mandatory deferral practices.

Hana Securities, Yuanta Securities, and IBK Investment & Securities were cited for similar violations, including lump-sum bonus payments and failing to apply the deferral rule to temporary or dual-role executives.



The FSS noted that these regulatory breaches are now officially recorded and may affect the reputational standing of the executives involved. The penalties follow a comprehensive audit conducted in 2023, during which the FSS reviewed compliance with bonus payment regulations across all domestic securities firms.

 

 

 

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