Regulation on Conglomerates
Floor leader Choi Kyung-hwan of the Saenuri Party has expressed a negative view on the party being convinced after the Tong Yang Securities situation that a law revision is necessary to enforce banking and commerce separation and expand eligibility screenings for major shareholders.
At the luncheon discussion in Seoul on October 11, Choi said, “There is not a single country in this world to have expanded the separation to non-monetary institutions,” and dismissed the party’s opinion to enforce the separation into industries such as securities and insurance.
He drew a line about applying eligibility screenings for major shareholders to non-monetary institutions as well. He suggested problems such as Vice President Lee Hye-kyung of Tong Yang Group withdrawing 600 million won (US$559,000) from a stock account right before the receivership as not a matter of shareholder eligibility, but of criminal penalty.
With the party leader expressing such an opinion, the prediction that the Tong Yang incident will accelerate the discussion of the law related to the management structure of non-monetary institutions turns out to be incorrect.
Instead, Choi announced, “Some regulations have been alleviated when the Capital Market Act was amended in 2009,” and added, “These [financial investment industry] regulations will be enforced again through an enforcement ordinance.”
Regarding the issue of enacting special legislation for Tong Yang Securities victims, he showed caution, saying, “It is not right for the government to step forward.” This special legislation for saving investment victims has a history of being first drafted and passed by the National Policy Committee in 2011 for the subordinated security bond investors of Busan Savings Bank, but foundered when former president Lee Myung-bak exercised his veto.