Seoul: Five securities firms have been fined a total of 3 billion won (US$2.1 million) for mis-selling equity-linked securities (ELS) products that track Hong Kong's H Index, as announced by the financial watchdog on Sunday. The penalties were imposed due to the firms' failure to properly inform customers of investment risks associated with these products.

According to Yonhap News Agency, KB Securities Co. received a 1.7 trillion-won fine last month for violating recording procedures and failing to notify customers about the investment risks. This action was documented in a regulatory filing by the Financial Supervisory Service. Other firms, including NH Investment and Securities Co., Mirae Asset Securities Co., Korea Investment and Securities Co., and Samsung Securities Co., were also fined for similar infractions.

ELS are hybrid securities whose returns are determined by the performance of underlying equities, such as a stock index. The penalties were prompted by significant losses suffered by buyers of HK-tied ELS in early 2024 when Hong Kong's H Index experienced a sharp decline.