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A Study on the Auditor’s Liability related to the Lawsuit of Savings Bank’s Subordinated bond investors

  • DONG-A LAW REVIEW
  • 2012, (55), pp.289-324
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law

Cho, Sang-Kyu 1

1한국공인회계사회

Accredited

ABSTRACT

In Savings Bank Affairs, most of the illegal loan or window dressing caused by major shareholder or executive was taken place by using other’s name illegally. These are representative examples that increased loan for interest payment and adding up financial consultancy fees. To cut to the point, they are cases which cannot presume a violation of cautious obligation to the Auditor because all of them used borrowed-name bank account. If an employee of bank windows had violated explanation obligation and had not presented product manual, a report of audit attached to a stock card would have little meaning of existence in one’s investment process. So in terms of investor, it can be assumed that there is no trade causality. Because an investor did not acknowledge the existence of stock card and did not examine it. In case of demage claim suit against Auditor under ‘Financial Investment Service and Capital Markets Act’, the auditor takes a burden of onus probandi. In order to be subjected to ‘Financial Investment Services and Capital Markets Act’ and an exemption clause of ‘Act on External Audit of Stock Companies’, the auditor has to prove the fact that “Despite considerable cautions, the Auditor was not able to know and did not neglect the obligation.” So the auditor’s status is disadvantageous and furthermore as to estimate liability ratio In korea, where the proportionate liability has not been introduced yet, the mistake set-off method which considers plaintiff’s mistake based on principle of equity is used to judge the auditor’s liability appropriately under the joint responsibility. In the future, the savings bank supervision system should be reformed. Preparing the supervision direction that the savings bank can play an original role as a small-loan finance and preventing major shareholder and executive from abusing their authority through tightening regulations on soundness of management structure and refraining excessive enlargement are needed. To protect the subordinated bond holder and depositor, the system should be reorganized by providing an institutional strategy such as enhancing the explanation obligation and restriction on an advertisement.

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