The former chief of KB Financial Group Inc. will likely face a tough disciplinary action from the regulatory authorities for leaking classified information to a U.S. advisory firm, the financial regulator said Tuesday.
Euh Yoon-dae, the ex-chairman of South Korea's second-largest banking firm, is expected to be reprimanded with a warning from the Financial Supervisory Service (FSS), which is due to deliver the final verdict on Euh on Thursday, according to FSS officials.
The FSS will likely suspend Park Dong-chang, the former chief strategy officer of KB Financial, from doing his job for breaching the disclosure rule on company information upon Euh's order, they said.
The two former KB executives have been suspected of leaking confidential information of KB Financial to Institutional Shareholder Services Inc. (ISS) in the U.S. in a bid to prevent the reappointment of several outside directors who had opposed the banking group's move to acquire the local unit of Dutch insurance giant ING Group.
The FSS was due to reach the verdict on Euh and Park at the previous review committee last month, but the decision was held off after being unable to draw the conclusion as the case has been under a heated media spotlight.
If Euh is administered the FSS' initial ruling, he will be banned from working in the financial industry for at least three years and lose all of his stock options in KB Financial shares, which are estimated to be valued at hundreds of millions of won.
Euh was named as the chairman of KB Financial by former President Lee Myung-bak in 2010 for a three-year term. He is known to be one of Lee's close aides.
Early this year, Park allegedly sent the classified company information to the ISS and some large shareholders to implore them to support the takeover of ING Life Korea by saying that directors' opposition is undermining the shareholders' value.
The ISS later published a report questioning the independence of KB Financial's board, as their ties to the government are seen to wield undue influence on the banking group, and it advised foreign institutional investors against some KB board directors' reappointment.