The Korea Herald


FSS reprimands Hana Daetoo, Wise Asset

By 조지현

Published : April 28, 2011 - 19:34

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Financial regulators on Thursday issued sanctions against a local asset management firm and a brokerage house for incurring huge losses after conducting allegedly reckless investments in stocks last November.

The Financial Supervisory Service held a committee meeting where they fined-tuned the level of penalties against Wise Asset and Hana Daetoo Securities for their alleged negligence in internal control.

The FSS decided to halt the business operations of Wise Asset for six months and to request the company to dismiss its chief executive.

Hana Daetoo received a warning, while its CEO was issued a "caution."

The sanctions will be confirmed or fine-tuned once more at a panel discussion of the Financial Services Commission, the decision-making body of the FSS.

Wise Asset suffered losses totaling 89 billion won ($79.4 million) from their investment activities on Nov. 11 when Deutsche Bank -- which has been under criminal investigation for stock manipulation -- dumped about 2 trillion won in shares on the Korea Exchange.

The benchmark KOSPI unexpectedly plunged 48 points in the last few minutes on the day due mainly to allegedly unfair trading of the Germany-based investment bank.

FSS inspectors have uncovered that Wise Asset engaged in careless betting which far surpassed the investment ceiling set by regulations and laws.

Market observers say the asset management company, whose equity capital stays at only about 10 billion won, has been on the verge of bankruptcy in the wake of the losses.

Hana Daetoo Securities also suffered similar losses after it paid a great portion (about 76 billion won) as a big broker ― on behalf of Wise Asset ― out of the 89 billion won betting of the small-sized asset management firm.

By Kim Yon-se