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Court accepts injunction request by Woori Financial head against reprimand

Woori Financial Group Chairman Sohn Tae-sung (Yonhap)
Woori Financial Group Chairman Sohn Tae-sung (Yonhap)

A Seoul court on Friday accepted an injunction request by the head of Woori Financial Group against the financial watchdog's reprimand over improper selling of derivatives-linked products that caused investors to incur massive losses.

The Seoul Administrative Court's decision removed hurdles for Woori Chairman Sohn Tae-sung's bid to win approval for his second term during its general shareholders' meeting scheduled for next Wednesday.

Sohn filed the request early this month seeking to suspend the Financial Supervisory Service (FSS)'s disciplinary action against him over the sale of the so-called derivatives-linked fund (DLF) products.

The DLF products were designed to earn large amounts of money when the interest rates of major economies stayed above a certain level.

Those products, however, turned into losers as bond yields in the US, Britain and Germany unexpectedly sunk amid speculation that central banks in major economies might aggressively cut their interest rates.

The FSS claimed it is possible to hold a CEO responsible for mishandling with regard to selling such financial products. Sohn's side has claimed that the disciplinary action is inappropriate since he was not directly involved in their selling.

In December, Woori Financial Group named Sohn to lead the group for another three-year term.

Reprimand or heavier disciplinary action could restrict him from serving a second term and seeking employment in the financial sector for three years.

It is not clear whether the FSS will appeal the court decision.

Earlier this month, the Financial Services Commission imposed a penalty of 19.71 billion won ($15.8 million) on Woori Bank and 16.78 billion won on Hana Bank over improper selling of DLF products.

It also banned the two commercial banks from selling private equity funds for six months.