Homeplus and securities firms Shinyoung Securities and Hana Securities face allegations of mis-selling asset-backed short-term bonds (ABSTB) following Homeplus's corporate rehabilitation filing approximately 1.5 years ago, with ₩404.9 billion in bonds remaining unredeemed since December 2024-February 2025. The Financial Supervisory Service (FSS) plans to hold a sanctions deliberation committee next month-end to determine penalties for Shinyoung Securities and Hana Securities after completing investigations into whether the firms knew of Homeplus's liquidity crisis and adequately disclosed risks to investors. The dispute centers on whether securities firms involved in issuing and selling ₩2.7221 trillion in Homeplus ABSTB from January 2023 to February 2025 failed to warn investors despite alleged prior knowledge of the retailer's financial distress, with over 80% of unredeemed bonds held by individual investors whose funds have been frozen for over 1 year and 6 months.
FSS Schedules Sanctions Deliberation for Shinyoung and Hana Securities
The FSS will hold a sanctions deliberation committee next month-end to decide penalty levels for Shinyoung Securities and Hana Securities related to Homeplus ABSTB sales, according to the financial investment industry on the 29th. The regulator recently completed investigations into both firms and is preparing to send examination opinion letters. Investors claim securities firms sold the bonds without adequate risk warnings until immediately before Homeplus filed for rehabilitation, while the firms assert they could not have predicted the rehabilitation filing and provided sufficient explanations of product structure and credit rating risks to investors.
Homeplus ABSTB Structure Explained
The disputed bonds are securitized products issued based on credit card receivables Homeplus used to pay suppliers for goods. Special purpose companies (SPCs) SY Plus First and SY Plus Second issued the ABSTB, with Shinyoung Securities serving as lead manager. Shinyoung Securities underwrote all issued ABSTB and delegated sales to Hana, Yuanta, and Hyundai Motor Securities. Homeplus used purchase-only cards from Shinhan, Lotte, and Hyundai Card to buy products for store sales. Card companies transferred these receivables to SPCs before payment dates to obtain early cash. The SPCs issued ABSTB backed by the card receivables and sold them to investors to raise funds. The bonds were issued twice monthly (mid-month and month-end) with 3-month maturities from January 2023 to February 2025, totaling ₩2.7221 trillion according to NICE Credit Rating.
₩404.9 Billion Remains Unredeemed Since Homeplus Rehabilitation Filing
Homeplus filed for corporate rehabilitation on March 4, halting redemption of ₩404.9 billion in ABSTB issued between December 2024 and February 2025. As the rehabilitation process extends, bonds reaching maturity have not been repaid on schedule, leaving investor funds frozen for over 1 year and 6 months. Over 80% of the unredeemed ₩404.9 billion is estimated to belong to individual investors. Investors have filed class-action lawsuits against securities firms, alleging products were sold without proper risk disclosure until immediately before the rehabilitation filing. Investor A stated, "Branch offices sold the product saying 'It's Homeplus, how could it go bankrupt?' Most victims built trust with private bankers over long trading relationships and invested based on their recommendations, but now we don't know when we'll get our money back."
Credit Rating Collapse Triggers Investor-Securities Firm Dispute
The timing of securities firms' awareness of potential credit rating downgrades is expected to be a factor in determining mis-selling. The final ₩82 billion ABSTB issuance maintained an A3(sf) credit rating until the February 25 issuance date, indicating adequate timely repayment ability but potential vulnerability to drastic environmental changes. The rating was downgraded to A3-(sf) within the same grade on February 28. On March 4, when Homeplus filed for rehabilitation, it dropped to C(sf), indicating questionable timely repayment ability. On March 6, it fell to D(sf), signifying insolvency. Critics argue that if securities firms knew of Homeplus's potential rehabilitation filing in advance, they could have predicted the credit rating decline. Investors claim firms deceived them by selling products described as stable-rated until one week before the filing, only for the product value to collapse within days. Securities firms counter that the ABSTB maintained an A3 rating at the time of sale and was a normal investment product. Shinyoung Securities stated it continuously confirmed Homeplus's management stability and liquidity management status, and whenever it inquired about ABSTB issuance feasibility, Homeplus responded "no problem." The firm maintains Homeplus never indicated or signaled potential rehabilitation filing. Securities firms claim they relied on Homeplus's explanations when issuing and selling products, and are themselves victims of the unannounced rehabilitation filing. A financial investment industry official stated, "Issuing and selling C or D rated products is not legally problematic. Mis-selling ultimately depends on what information securities firms possessed at the time and to what extent they explained risks to investors."
FAQ
What happened to Homeplus ABSTB investors after the rehabilitation filing?
₩404.9 billion in ABSTB issued between December 2024 and February 2025 remains unredeemed since Homeplus filed for corporate rehabilitation on March 4, with investor funds frozen for over 1 year and 6 months. Over 80% of unredeemed bonds belong to individual investors who have filed class-action lawsuits against securities firms.
How did Homeplus ABSTB credit ratings change before the rehabilitation filing?
The final ₩82 billion ABSTB issuance maintained an A3(sf) rating on February 25, was downgraded to A3-(sf) on February 28, dropped to C(sf) on March 4 when Homeplus filed for rehabilitation, and fell to D(sf) on March 6.
What will the FSS decide regarding Shinyoung and Hana Securities?
The FSS will hold a sanctions deliberation committee next month-end to determine penalty levels for Shinyoung Securities and Hana Securities after completing investigations into whether the firms adequately disclosed risks to investors when selling Homeplus ABSTB.
