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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Sangjin] Shin Young Securities was disciplined by the Financial Supervisory Service for failing to properly explain investment risks to customers while selling Lime and Discovery hedge funds.
According to the Financial Supervisory Service on the 15th, Shin Young Securities violated obligations regarding disclosure and suitability principles, resulting in a warning and a fine of 30 million won. Regulatory sanctions range from warnings to disciplinary actions, including penalties, business suspensions, and even license cancellations. Fourteen employees involved faced penalties such as salary cuts.
The Financial Supervisory Service determined that Shin Young Securities, from July 2017 to June 2019, omitted critical information in investment prospectuses for four funds, including Lime and Discovery, sold to 286 individuals.
Specifically, Shin Young Securities emphasized profit enhancement through Total Return Swaps (TRS) leverage in the Lime Fund proposal but did not adequately address the risk of potential losses. In the case of the Discovery Fund, essential risk information such as default rates on U.S. small business loans, the risk of platform loans, and the product's profit structure were not disclosed to investors. They also misrepresented credit card loan receivables as low-risk products unrelated to the underlying investment assets.
Furthermore, they neglected procedures to assess the suitability of financial products for investors, failing to properly document verification materials such as signed agreements or recorded conversations during the investor risk assessment process. They also made undue claims regarding profit rates and improperly encouraged investments.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
