Financial authorities said Wednesday it has punished the chiefs of the nation’s three largest local credit raters over illegally allowing employees to engage in both sales and running credit assessments.
The sanctioned chiefs include Yoon In-sub of Korea Rating, Cho Wang-ha of Korea Investors Service Inc., and Lee Sang-kwon of NICE Investors Service Co.
The three were banned from engaging in the financial sector for three years, said officials from the Financial Supervisory Service.
The officials said the big three financial credit raters let the credit evaluation team additionally engage in sales.
“They allowed their analysts, who must stay impartial throughout the financial credit assessment process, to double up for sales operation too,” an FSS official said.
The FSS dismissed the agencies’ argument that allowing employees to perform both roles did not cause any bias in their credit evaluation results.
Earlier in January, the three firms were punished over a separate illegal practice, for giving clients a pre-notice of credit assessment results in exchange for business deals. The firms were also caught postponing the report of negative assessment results until clients capped the issuance of corporate papers.