South Korean regulators issue auditor designations and sanction Shinhan Securities

The Financial Supervisory Service (FSS) has issued preliminary notices for the 2027 fiscal year auditor designation to 1,193 companies. This group includes 404 companies under periodic designation and 789 under discretionary designation. The number of notified companies decreased by 37 compared to the previous year. Among the discretionary designations, 222 companies were newly designated due to upcoming listings, and 106 were designated due to failing financial standards, such as three consecutive years of operating losses.

Separately, the FSS has issued warnings and requested improvements from Shinhan Securities regarding its stock recommendation services. An investigation revealed that the firm charged additional fees on all trades made by customers subscribed to its recommendation service, even if the trades were unrelated to the recommended stocks. For overseas stock transactions, these additional fees reached up to 0.25 percentage points.

The FSS also criticized the firm for failing to clearly distinguish between basic and additional fees in transaction statements, making it difficult for customers to track costs. Furthermore, the regulator identified issues with cash reward events that potentially encouraged excessive trading and lacked sufficient conflict-of-interest safeguards. Shinhan Securities stated it has transitioned the service to a free model and will continue to manage customer convenience.