Regulators are set to punish the Korean operation of Goldman Sachs for breaching the law on sales of overseas financial products including government bonds issued in Malaysia.
The Financial Supervisory Service said Thursday that it has completed an investigation into Goldman Sachs on allegations that the Wall Street giant sold the products directly to domestic consumers “without going through its Korean unit.”
The nation’s laws and regulations require the sales of international bonds to the local investors be made only through the local branch.
“We looked into whether Goldman Sachs observed the regulation in its sales of the Malaysian bonds only, and not the other financial derivatives,” said Chung Hyung-gyu, a senior officer at the FSS financial investment examination division.
Chung added that the bone of contention lies in that Goldman Sachs’ wrongdoing is largely procedural and that no investor losses were detected related to that matter.
The investigative results of the FSS have been recently handed over to the Financial Services Commission, the highest financial decision maker, to decide on the intensity of the punishment.
The FSC is expected to impose heavy punishment to the managing director at the local operation of Goldman Sachs, sources said, the intensity varying from punitive salary cut to dismissal. In such cases, the local chief is banned from working at any financial companies within the next three years. The Korean unit of Goldman Sachs is also facing an institutional punishment.
The fate of the local unit of Goldman Sachs is likely to be announced on Dec. 19, following the regular bimonthly meeting of the FSC review committee, according to the FSS officials.
