Punishment looms for Goldman Sachs Group Inc's S.Korea unit
The financial regulator of South Korea intends to penalize the South Korean unit and employees of Goldman Sachs Group Inc for violating the rules regarding sales of financial products. In a phone interview with Bloomberg, Financial Supervisory Service Director General Cho Gook Hwan said it had already told Goldman Sachs of its plans. Cho added that they will determine the punishment after the Wall Street company has given its explanation.
The regulator also stated that they will hold a committee meeting to decide on the penalty as well as the number of workers of the unit that will face sanctions.
In September the regulator had said that there were three foreign brokerage firms that were being probed as part of the evaluation of derivative sales and other operations to determine if they complied with the country's regulations. The regulator then announced a month later that it had finished its review of Goldman Sachs. Citing a report which appeared in MoneyToday in September, Bloomberg said the Royal Bank of Scotland Group and Credit Suisse Group were also being probed.
According to a report on the Korea Economic Daily which cited unnamed officials from the financial industry, the Financial Supervisory Service had found that Goldman Sachs violated local rules when it sold bonds backed by the Malaysian government to investors in the country through its office in Hong Kong. Korean regulations state that product recommendations and sales should be done through licensed local businesses.
Cho told Bloomberg that the regulator did not find any problem with the product itself. The regulator did not give further details to Bloomberg on the investigations covering Credit Suisse and RBS. Goldman Sachs Seoul-based spokesman Christopher Jun declined to give comments on the planned punishment of the FSS after being contacted by Bloomberg.
No comment was also given by RBS and Credit Suisse.