The Financial Supervisory Service (FSS) has expanded its on-site investigation into allegations of improper sales during the issuance and sale of corporate bonds by JTBC to include Hanyang Securities.
According to the financial investment industry on July 10, the FSS began its on-site inspection of Hanyang Securities, which participated in the underwriting of JTBC's corporate bonds, on July 8.
Previously, the FSS initiated an on-site inspection on July 2 of Shinhan Investment Corp., the lead underwriter for JTBC's corporate bonds, and Kiwoom Securities, which sold asset-backed short-term bonds (ABSTB) to individual investors. Just six days after starting the inspection, the scope was broadened to include the underwriting team.
Hanyang Securities acquired 9.3 billion won of unsold bonds during the demand forecast for JTBC's 50 billion won corporate bond issuance in August of last year. The firm is also reported to have been involved in the distribution of a 93 billion won corporate bond issued in February of this year, about four months before a default occurred.
The FSS is examining whether Hanyang Securities adequately assessed JTBC's financial condition and repayment risks before underwriting the bonds and whether it properly informed investors of the associated risks.
As the investigation, which initially focused on the lead underwriter and individual sales firms, expands to include the underwriting team, the FSS's scrutiny is broadening to encompass the entire bond underwriting review process.
JTBC fell into default on June 12 after failing to repay 20.6 billion won in asset-backed loans. Following this, a liquidity crisis spread within the JoongAng Group, leading JTBC and its affiliates, including JoongAng Holdings, Contentree Central, Megabox Central, and JoongAng P&I, to file for court receivership.
The court accepted JTBC's application for the Autonomous Restructuring Support (ARS) program, while the other four affiliates were placed under court receivership.
* This article has been translated by AI.
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