Daishin Securities Sends Certified Letters to Three Lime TRS Firms... Legal Battle Anticipated

[Asia Economy Reporter Koh Hyung-kwang] Daishin Securities is intensifying disputes by sending certified letters to securities firms with total return swap (TRS) contracts related to Lime Asset Management's redemption funds. There is also an increasing possibility of legal battles with these securities firms as a measure to recover customer assets.

According to the financial investment industry on the 14th, Daishin Securities sent certified letters on the 12th to three securities firms?Shinhan Financial Investment, KB Securities, and Korea Investment & Securities?and Lime Asset Management regarding TRS contracts.

Through the certified letters, Daishin Securities requested that these securities firms refrain from prioritizing claims for Lime fund settlement distributions over general customers.

Additionally, the certified letters reportedly included content stating that if these securities firms receive settlement distributions from Lime management funds first and this causes additional losses to Daishin Securities' customers, the securities firms could be held legally responsible.

Lime Asset Management previously entered into TRS contracts worth 670 billion KRW with three securities firms?Shinhan Financial Investment, KB Securities, and Korea Investment & Securities?in relation to the management of three parent funds whose redemptions were suspended. The amounts are known to be approximately 500 billion KRW for Shinhan Financial Investment, 100 billion KRW for KB Securities, and 70 billion KRW for Korea Investment & Securities.

The problem lies in the fact that securities firms with TRS contracts with Lime management have priority repayment rights during the fund asset settlement process. If these securities firms withdraw funds from the Lime fund first, individual investors are likely to suffer greater losses accordingly.

It has become impossible to rule out the possibility that Lime fund distributors such as Daishin Securities will engage in legal battles against these securities firms to recover customer assets in the future.

According to the Financial Supervisory Service and the Korea Financial Investment Association, as of the end of July last year, Daishin Securities' remaining balance of Lime Asset Management private equity fund sales was 1.176 trillion KRW. Daishin Securities reportedly sold about 70 billion KRW worth of funds to individual investors among this amount.

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