Lime Investors Launch Full-Scale Legal Action... Lawsuits Against Lime, Shinhan Investment Corp, and Woori Bank

"Suspected Fraud or Fraudulent Transactions Occurred"

[Asia Economy Reporter Yoo Byung-don] Last year, investors in Lime Asset Management funds who suffered losses due to the suspension of redemptions by private equity funds have launched full-scale legal action by filing complaints against Lime, Shinhan Financial Investment, and Woori Bank on charges including fraud.

As investors have taken legal action for the first time since the redemption suspension incident, and considering that some investors are preparing additional complaints or lawsuits, the repercussions are expected to grow further.

On the 10th, the law firm Hannuri announced that it filed a complaint with the Seoul Southern District Prosecutors' Office on behalf of three investors, accusing Lime Asset Management, Woori Bank, and six officials from Shinhan Financial Investment of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act.

The investors pointed out, "Although the reason for the suspension of redemptions occurred in November 2018 in the trade finance fund (Pluto TF-1), this fact was not disclosed, and the series of trade finance funds continued to be newly designed and sold."

They further claimed, "Lime Asset Management is suspected of having sold the trade finance fund by falsely representing it as being operated normally, presumably to secure redemption funds for maturing funds."

The investors also explained, "It appears that there was fraud or fraudulent unfair trading, such as arbitrarily manipulating the returns or net asset value of the parent fund including the trade finance fund, or falsely stating or displaying important investment judgment details such as investment targets and returns."

Additionally, they added, "Lime Asset Management’s sale of the trade finance fund’s beneficiary certificates without any prior notice seems to have been an act to conceal the deteriorating management situation and manipulate returns and net asset value."

Regarding Shinhan Financial Investment, they argued, "Since Shinhan Financial Investment entered into a total return swap (TRS) contract with Lime Asset Management and invested in the trade finance fund under Shinhan Financial Investment’s name, there is a possibility of collusion with Lime Asset Management."

Hannuri explained, "There are circumstances suggesting that Woori Bank was also aware of the trade finance fund’s insolvency in advance, so Woori Bank officials were included as subjects of the complaint."

Furthermore, the law firm Gwanghwa is preparing complaints by collecting statements from victims, so the scale of complaints is expected to increase. Hannuri is also preparing civil lawsuits to request cancellation of fund contracts.

Earlier, Lime Asset Management caused a stir by announcing in October last year the postponement of redemption and repayment for three parent funds investing in sub-funds called 'Thetis No. 2,' 'Pluto FI D-1,' and the trade finance fund 'Pluto TF-1.'

The number of sub-funds with postponed redemptions is 157, with an estimated amount of 1.5 trillion won.

At the time of announcing the redemption postponement, Lime Asset Management explained, "If assets are sold at a low price recklessly, losses will be passed on to investors," and pledged to minimize principal losses.

However, concerns over principal losses are growing as the U.S. hedge fund International Investment Group (IIG), the investment destination of the trade finance fund, was deregistered last November on charges of selling fake loan bonds worth at least 60 million dollars.

Lime Asset Management is suspected of having been notified of asset losses by IIG in November 2018 but continued to sell the fund without informing investors of this fact.

Shinhan Financial Investment is known to have loaned about 360 billion won by entering into a TRS contract with Lime Asset Management.

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