South Korea’s financial regulator is considering banning all equity-linked securities after finding that the country’s biggest banks and brokerages misled retail investors over products tied to Chinese stocks.
The Financial Supervisory Service’s five-month investigation into five banks and six brokerages found poor regulatory compliance and a lack of consumer protection for sales of securities linked to the Hang Seng China Enterprises index.
The products are fixed-income derivatives that promise bond-like coupons and early redemptions based on the performance of assets, but investors can suffer heavy losses if the underlying asset falls below a certain level.
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