Hana Financial Group joined its peer Woori in legal challenge against the administrative sanction on sale of derivative-linked funds after some of their overseas asset-backed derivatives caused major retail losses.

According to financial industry sources on Monday, Ham Young-joo, vice chairman of Hana Financial Group took the affair to an administrative court in Seoul, seeking a nullification and injunction to an order from Financial Supervisory Service restricting its sale of derivatives-backed funds.

Hana Bank along with Woori Bank has been accused of selling high-risk DLFs tied to 10-year German Treasury bond to novice investors without fully explaining potential risks. The investment resulted in massive losses for investors.

In March, the FSS ordered the two banks a partial suspension of their business, including sale of new private equity fund products, for six months on top of imposing a big fine of 16.78 billion won ($13.7 million) for Hana and 19.71 billion won for Woori. The top financial authority also gave a “reprimand” warning, the third heaviest in five-level punishment system, to Ham and Woori Financial Group Chairman Sohn Tae-seung.

Sohn also has filed an administrative suit for cancellation of the punishment in March. His injunction requested was accepted, allowing him to clinch his second term as group chairman.

By Lee Sae-ha and Cho Jeehyun

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