11 South Korean financial firms found violating rules in selling HK-tied securities

Authorities will soon issue a guideline for the firms to compensate investors.

Eleven financial institutions in South Korea were found violating rules while selling equity-linked securities (ELS) products tied to Hong Kong’s benchmark index.

Following a two-month probe, the Financial Supervisory Service (FSS) revealed that it has found wrongdoings on the FIs selling the ELS product tracking the Hang Seng China Enterprises Index.

Charges include poor management of sales policy and consumer protection, mis-selling at the system level, and various kinds of mis-selling in individual cases.

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Authorities have promised to “strictly” punish wrongdoings in investment product sales under relevant laws and regulations.

The FSS will provide a guideline for the FIs regarding compensating retail investors for their losses. 

“The FSS will help facilitate the compensation process and review how the financial institutions voluntarily compensate and reconcile with the investors hurt by the product,” the FSS said in a press release published on its website.