Bankers Misrepresented Risky China-Linked Notes to Korean Retail Investors, Watchdog Says

(Bloomberg) — South Korea’s financial watchdog said it found a range of instances where some of the country’s largest brokers misrepresented risky China-linked structured products to retail investors, many of whom are retirees.

An investigation into five banks and six brokerages uncovered poor regulatory compliance and systematic failures regarding the sale of complex financial products linked to the Hang Seng China Enterprises Index, the Financial Supervisory Service (FSS) said on Monday. Losses from the popular notes are seen totaling 5.8 trillion won ($4.4 billion) this year, if the index remains at the current level, it said.