S Korean regulator reportedly slaps $3bln fine on banks including StanChart for misselling derivatives

South Korean financial regulator has reportedly slapped a 600 billion won (HK$3 billion) penalty on five lenders including Standard Chartered (2888) over the sales of highly risky derivative products to retail investors linked to Chinese stocks.

The amount was a massive downsize from the initially proposed 1.9 trillion won fine on the lenders: KB Kookmin Bank, Shinhan Bank, Hana Bank, NH Nonghyup, and SC Korea, South Korean media reported, citing the Financial Supervisory Service.

The product in question, equity-linked securities tied to the Hang Seng China Enterprises Index, was sold to retail investors, especially the elderly, without proper risk disclosure, the reports said. 

More than 19 trillion won worth of such derivatives have been sold since 2021.

The enterprises index, which tracks Chinese stocks listed in Hong Kong, plunged from a peak in February 2021 to 2023 amid China's weak economic recovery, leading to huge losses for investors.

The banks earlier were ordered by regulators to compensate investors’ losses from the product.

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