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Photo courtesy of Daol Investment & Securities |
[Alpha Biz= Paul Lee] SEOUL, June 4 — South Korea’s Financial Supervisory Service (FSS) has imposed a fine of 140 million won ($100,000) on Daol Investment & Securities for recommending high-risk debt securities to retail investors.
According to regulators, the firm structured a special purpose company (SPC) to securitize project financing (PF) loans in which it held subordinated exposure. The SPC subsequently issued unrated private bonds backed by the loans, which the firm attempted to sell to individual investors.
The FSS concluded that the firm effectively transferred the repayment risk of its subordinated PF loans to retail investors, in violation of capital market regulations that prohibit recommending high-risk debt instruments to non-professional investors.
In addition to the fine, disciplinary actions including warnings and reprimands were imposed on related employees.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
