The Financial Supervisory Service notified Woori Financial Group Chairman and Woori Bank Chairman Sohn Tae-seung and Hana Financial Group Vice Chairman Ham Young-joo of a heavy penalty (criticism warning) in connection with the loss of DLF (derivative combination fund) in key countries. Sohn, who is preparing for a second term, is scheduled to take legal action early next week.
According to the financial sector on Thursday, the FSS delivered to each bank the results of the sanctions, which included heavy penalties, as well as institutional sanctions on Woori and Hana banks the previous night before.
Sohn, who is seeking to confirm his second term at a general meeting of shareholders on the 25th, plans to take legal action early next week. This is because Son must disable or at least suspend the sanctions before the shareholders' meeting if he wants to serve a second term. The remaining term of office can be completed if reprimanded, but employment in the financial sector will be restricted for three years.
As a result, Chairman Sohn is expected to file an application to suspend the enforcement of administrative disposition, asking for the suspension of the sanctions, and at the same time take steps to file a lawsuit against the government.
"We know that Chairman Sohn will file a lawsuit early next week after reviewing related documents," a Woori Finance official said. "We intend to determine whether the court is justified in the punishment of reprimanding the officials."
Woori Financial's board of directors has already lent support to Sohn's legal action against the FSS. The board of directors held a meeting on Thursday and decided to place Sohn as the final candidate for the next chairman of the three-year term on the agenda of the regular shareholders' meeting. He took steps to allow Sohn to win approval for a second term at the shareholders' meeting.
"Although the Financial Services Commission cited lack of internal control standards under the Financial Supervisory Service (FSS) as the basis for the CEO's sanctions, many people say that the fact that the board of directors of Woori Finance, which is comprised of oligopolistic shareholders, continues to carry out the process of Son's second term is a win-win situation if they file an administrative suit," a source from the financial sector said.
Considering the precedent, the court is expected to cite or reject the injunction within a week. "If the results of the injunction before the shareholders' meeting are meaningful, we can only make a decision within a few days to quote or reject it," a legal source said. "But we cannot conclude that the court has a high chance of winning an administrative suit just because the injunction is cited."
If the injunction is rejected, Son's second term will be canceled. Son and Woori Financial's board of directors have also completed preparations for the worst case scenario. With the chairman's job acting system in mind, Lee Won-duk, vice president of Woori Finance Holdings' strategic group, will be appointed as an in-house director.
Meanwhile, Vice Chairman Ham, whose heavy punishment has been finalized along with Sohn, is expected to closely watch Sohn's move before deciding what to do. Ham's term of office is at the end of this year, so he is relatively relaxed. Administrative suits can be filed within 90 days of receiving the sanctions notice.