The FSS conducted partial on-site examinations of the local branches of Merrill Lynch from April 19 to May 10 and UBS Warburg from May 21 to June 17 to investigate allegations of improper disclosures by analysts at these two branches.

After a thorough review of the findings, on August 13, 2002, the FSS decided to take following disciplinary action against the subject firms and analysts for a number of violations that have been found through the investigation. These measures will be officially enforced after the FSC approval on Friday, the 16th.

- The Seoul Branch of UBS Warburg will receive a “severe disciplinary warning,” which means, in case of a repeated violation, the company can be subject to a business suspension.

- The Seoul Branch of Merrill Lynch will receive a “disciplinary warning,” one step below the “severe disciplinary warning.”

- UBS Warburg: 15 employees in total, will be penalized, one of whom will receive a severe disciplinary warning, one a suspension of business activity for a limited period of time, four a salary reduction, and the remaining nine a censure.

- Merrill Lynch: 6 employees will be penalized; one will receive a suspension of business activity, one a salary reduction, and the remaining four a censure.

* This is the first time since its foundation that the FSS has imposed sanctions against branch offices of foreign securities firms and their individual staff of measures above a salary reduction.

The FSS will continue to carry out investigations on both domestic and foreign securities firms for any possible unlawful business conduct in order to reinforce market discipline.

* Please refer to the attached PDF for details.