1. Overview of the Case
The client, a CEO of a securities firm, received a notice from the Financial Supervisory Service (FSS) around August 2024 that he was subject to a "Reprimand Warning" based on findings that, under the Capital Markets Act, he bore responsibility as i) the actor in linked transactions between discretionary accounts and proprietary assets intended to circumvent the prohibition on ex-post benefit provision (subject to a cautionary warning); ii) the actor in linked transactions between trust accounts and proprietary assets (cautionary warning); iii) the actor in linked transactions between collective investment assets and proprietary assets (cautionary warning); and iv) the supervisor responsible for violations of the prohibition on operating collective investment assets based on investor instructions (cautionary warning).
Although the client's firm had implemented a customer-support measure using several hundred billion won of proprietary capital in November 2022, which was later found to violate the Capital Markets Act, and was recognized as conducting internal control activities, the client was designated as the "actor" and thus faced significantly harsher liability unlike other securities companies.
2. Key Issues
The key issues in this case were: whether it was appropriate to assign "actor liability" to the CEO; whether it was reasonable to treat the single act of injecting proprietary capital as three separate acts (trust, wrap, and private fund) and apply cumulative aggravation; and whether imposing severe disciplinary action on the CEO was justifiable.
3. Our Arguments and Role
The client’s company had already retained major law firms from the FSS inspection stage. However, in order to obtain the best possible result during the sanctions review, the client additionally retained 바카라 게임 사이트, recognizing the firm's exceptional expertise and network in this field.
Representing the client, we argued that, under the Inspection and Sanctions Regulations, an "actor" is defined as one who, considering the nature of the work and the degree of involvement in decision-making, holds "substantive final decision-making authority." The client, however, had not participated in any such decision-making, and funds were executed even before the CEO's approval. Under the firm’s internal rules, the client was not the substantive decision-maker. Thus, the client should bear not "actor liability" but, at most, "supervisory liability."
We also argued that even if the CEO were treated as the actor, the injection of proprietary capital into trust, wrap, and private fund accounts should be regarded substantively as a single act, and therefore cumulative aggravation was inappropriate.
Through our advocacy, the FSS Sanctions Review Committee accepted the view that treating the client as the actor was problematic and imposed a minor warning ("Cautionary Warning"), rather than a heavier disciplinary measure.
4. Outcome and Significance
Despite multiple law firms already advising on the matter, the client retained us for additional support, which ultimately enabled the reduction of the CEO's sanctions from a serious disciplinary action to a minor warning, which was an exceptional outcome.
Had the severe disciplinary action been finalized, the client would likely have been unable to seek renewal of his CEO tenure and might have faced employment restrictions effectively forcing him out of the financial industry. By choosing us, the client successfully renewed his CEO term and continues to lead the securities firm vigorously.
