1.5 Trillion Lime Fund Litigation Battle, Focus on Dispute Mediation for Incomplete Sales

100 Complaints Received from Affected Investors

[Asia Economy Reporter Park Jihwan] The litigation battle among investors, asset management companies, and sales firms surrounding Lime Asset Management, which caused a massive redemption suspension incident worth up to 1.5 trillion KRW last October, is intensifying. In particular, investors are expected to focus on dispute mediation regarding banks' incomplete sales.

According to financial authorities and the financial investment industry on the 13th, investors who suffered losses related to the Lime incident have filed about 100 dispute mediation complaints with the Financial Supervisory Service (FSS) from last October until the 10th of this month. They have also filed criminal complaints for fraud not only against Lime Asset Management but also against Shinhan Financial Investment, Woori Bank, and others, asserting that sales firms share responsibility for incomplete sales along with the asset manager.

Sixteen sales firms, including banks and securities companies, have formed a joint response team and are conducting internal investigations into the scale of damages as they prepare lawsuits against Lime Asset Management. If the due diligence results on Lime funds reveal illegal acts by Lime Asset Management, such as prior knowledge of fund insolvency signs or manipulation of fund returns, they plan to take all possible legal actions, including criminal complaints.

As the Lime incident enters full-scale litigation, initial attention is focused on the due diligence results of the Lime funds. Lime Asset Management halted redemption and repayment of sub-funds worth 1.5 trillion KRW invested in three master funds ? 'Thetis No. 2 (Mezzanine)', 'Pluto F1 D-1 (Private Bonds)', and 'Pluto TF-1 (Trade Finance)' ? last October and has been conducting an audit of these funds through an accounting firm.

Sam-il Accounting Corporation, responsible for the audit, initially planned to notify the results for Thetis No. 2 on this day and for Pluto FI D-1 by the 21st. However, the audit has faced difficulties due to the disappearance of key personnel, including former Lime Asset Management Vice President Lee Jongpil, ahead of the November warrant hearing last year. Accordingly, it is reported that the audit results will be re-notified to Lime Asset Management and the FSS by the end of this month or early next month.

A senior official from the FSS stated, "Although Lime Asset Management manages assets exceeding 5 trillion KRW, it has only about 40 to 50 employees. Among them, only a very small number were actually involved in fund management, and many of these have disappeared or resigned, making it difficult to ascertain the scale of losses." The FSS is currently considering dispatching resident examiners to Lime Asset Management's office. Resident examiners stay at the financial investment firm's office to monitor the progress of the audit and the company's efforts to resolve the situation.

The FSS's dispute mediation is expected to begin in earnest only after the audit report from Sam-il Accounting Corporation is released and the loss amount for the relevant funds is confirmed. An FSS official said, "Currently, about 100 complaints related to Lime have been received, but the dispute mediation process, including determining compensation amounts, can only start after the accounting firm's audit is completed and losses are confirmed."

Future dispute mediation is expected to focus on banks. A financial authority official explained, "People who visit securities firms basically have the intention to invest. However, in the case of banks, the Lime funds could be misunderstood as products not much different from fixed deposits, so how banks introduced and sold these high-risk products will be crucial."

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