Photo = Yonhap news

 

 

[Alpha Biz= Kim Jisun] Two employees of Shinhan Investment Corp. have been sentenced to prison for concealing losses of approximately KRW 130 billion (USD 94 million) incurred through ETF futures trading. The Seoul Southern District Court handed down the verdict on June 26, citing serious breaches of trust and fraudulent conduct.



Judge Yoo Jeong-hoon of the Seoul Southern District Court’s Criminal Division 7 sentenced Mr. Cho, who was in charge of liquidity provision (LP) for ETFs, and Mr. Lee, the department head, to three years in prison each for fraud and related charges.



“This case represents a classic white-collar crime, where the perpetrators abused the trust placed in them for unlawful gain,” Judge Yoo said. “Given the scale of the financial damage, the offense is grave and inexcusable.”



The court further noted that the financial losses have not been recovered, and there has been no visible effort by the defendants to compensate for the damages. “Victims are demanding strict punishment, and severe penalties are therefore unavoidable,” the judge added.



According to prosecutors, the defendants incurred losses of KRW 128.9 billion while trading ETF futures in August 2023, amid a sharp downturn in domestic markets. Instead of reporting the loss, they allegedly falsified records in the internal trading system to show a gain of KRW 130 billion from swap transactions.



In a separate charge, Cho and Lee also manipulated internal accounting used for performance-based compensation after suffering KRW 108.5 billion in losses from overseas ETF investments. Through these actions, Cho and Lee were found to have illicitly received performance bonuses totaling KRW 137.5 million and KRW 341.7 million, respectively.



The case underscores growing regulatory scrutiny over internal risk controls and ethical compliance in Korea’s investment industry.

 

 

 

 

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