Suspicion of Incomplete Sales of Kkorimune Lime Fund

Submission of Damage Statement to Law Firm
Principal Loss and Inadequate Investment Information
Woori Bank and Others Likely Unable to Evade Responsibility
Focus on Lime Asset Management Loss Manipulation

[Asia Economy Reporter Park Ji-hwan] "I asked them not to invest in funds because I had no financial knowledge, but the staff signed me up without any explanation about the funds." "The bank recommended the funds but did not provide any contract or explanatory documents, so I didn't even know the name of the fund I was enrolled in."

Suspicions of incomplete sales related to Lime Asset Management funds, which caused controversy last October due to a large-scale suspension of redemptions, are emerging one after another. Unlike earlier when sales agencies such as Woori Bank claimed they were merely sales agents for Lime Asset Management and tried to avoid legal responsibility, it has become difficult for them to escape liability for failing to properly explain the possibility of principal loss and investment destinations. This recalls the time during last year's Derivative Linked Fund (DLF) scandal when they claimed to have sufficiently informed investors of the risk of principal loss.

According to the financial investment industry on the 6th, investors in three master funds of Lime Asset Management?'Thetis No. 2,' 'Pluto FI D-1,' and 'Trade Finance'?whose redemptions have been postponed, have submitted statements detailing incomplete sales damages to the law firms Gwanghwa and Hannuri, which are preparing civil and criminal lawsuits.

In their statements, investors testified, "I invested because I was told it was 100% safe and that the company was large, so the risk rate was zero (0)," and "I was told that since it was a bond product, there was absolutely no principal loss." This indicates that investors did not receive guidance from sales agencies about the possibility of principal loss or redemption delays.

There are also claims that sales staff arbitrarily classified investment tendencies as 'aggressive investment type.' One investor testified, "The private banker (PB) manipulated the investor profile questionnaire so that my investment tendency appeared as aggressive investment type."

If these investor claims are proven true, it will be difficult for the sales agencies to avoid legal responsibility. According to the Capital Markets and Financial Investment Business Act, acts such as providing false information during the investment solicitation process or continuing to solicit investments despite the investor's refusal are all punishable as unfair solicitation. Additionally, if a financial investment business operator fails to explain the contents or risks of an investment product to the investor and investment losses occur, they are liable for damages.

Currently, based on 157 funds in the banking sector with possible redemption delays, the sales amounts of Lime-related funds are as follows: Woori Bank 325.9 billion KRW, KEB Hana Bank 95.9 billion KRW, Busan Bank 42.7 billion KRW, Gyeongnam Bank 13.9 billion KRW, NH Nonghyup Bank 6.5 billion KRW, KDB Industrial Bank 5.6 billion KRW, and Shinhan Bank 5.6 billion KRW. Previously, banks were revealed to have failed to properly inform investors of loss risks when selling overseas interest rate-linked DLFs last year, causing controversy. The Financial Supervisory Service (FSS) clearly expressed its determination to eradicate incomplete sales by recognizing compensation rates up to a record high of 80% for Woori Bank and Hana Bank, which sold DLFs, through the Dispute Mediation Committee. At that time, the FSS emphasized, "If financial institutions sold option products to individuals without properly explaining the risks, the authorities cannot overlook it."

Separately from incomplete sales, attention is also focused on whether Lime Asset Management manipulated loss risks. The FSS is currently investigating Lime Asset Management on suspicion of investing approximately 100 billion KRW to manipulate their fund returns. Regarding the three problematic Lime funds, it is alleged that they purchased 100 billion KRW worth of private bonds from certain unlisted companies, and these unlisted companies used the invested money to acquire Lime fund’s non-performing assets, thereby artificially boosting the Lime fund’s returns.

This content was produced with the assistance of AI translation services.