The Financial Supervisory Service has launched an investigation into whether Goldman Sachs (GS +3.3%), Credit Suisse (CS +2%), and Royal Bank of Scotland (RBS +3.8%) violated local laws when they sold foreign-issued bonds to Korean investors directly from overseas offices, reports the WSJ. Korean law says such paper can only be sold in-country from banks' local branches.
A source says the agency is nearly finished gathering information from Goldman and is set to move on to Credit Suisse. Any decision on what action to take will be made after information has been gathered from all three.
Searching for yield just like the rest of us, Korean institutional investors have begun to buy structured fixed-income products from abroad in recent years, with Credit Suisse particularly active in selling the products.