Raum·Port Korea, Financial Supervisory Service Sanctions Related to Lime Employee Fund Involvement

Financial Supervisory Service Detects Violation of the Capital Markets Act

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] Financial authorities are preparing sanctions against Raum Asset Management and Port Korea Asset Management in connection with some Lime Asset Management employees creating dedicated funds to pocket hundreds of billions of won in illicit gains.

According to financial authorities on the 19th, the Financial Supervisory Service (FSS) views that Raum and Port Korea violated the Capital Markets Act by accepting requests from Lime employees to design original equipment manufacturer (OEM) funds. Under the current Capital Markets Act, asset management companies are prohibited from creating OEM funds based on orders, instructions, or requests from fund distributors such as banks or securities firms.

When suspicions of Lime's fund return recycling surfaced in August last year, the FSS conducted an inspection of Lime and simultaneously examined the two asset management companies. During this process, the FSS detected suspicious transactions between some Lime employees and these asset managers. Upon learning that investing in convertible bonds (CB) of a specific KOSDAQ-listed company would yield significant profits, they created dedicated funds in which they were the beneficiaries. Subsequently, these dedicated funds were enrolled in OEM funds created by Raum and Port Korea, which purchased the KOSDAQ-listed company's CBs at low prices. By acquiring CBs below market value, they secured hundreds of billions of won in profits.

Those involved in this incident include former Lime Chief Investment Officer (CIO) and Vice President Lee Jongpil, who disappeared before a pre-trial detention hearing in November last year, and employees who worked in Lime's Alternative Investment Headquarters.

Based on the inspection results of the Lime employees involved, the FSS reported former Vice President Lee and others to the prosecution twice?in September last year and February this year?on charges of fraud and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. The FSS found that Lee and others were suspected of breach of trust using job-related information. Additionally, Raum and Port Korea were diagnosed with violating OEM fund regulations.

The FSS plans to proceed with disciplinary procedures against Raum and Port Korea. A disciplinary committee for Lime, Port Korea, and Raum is expected to be convened as early as the second quarter.

The FSS is also reviewing whether unfair trading occurred concerning the listed stocks Lime invested in through its funds. They intend to investigate whether Lime conspired in stock price manipulation by providing funds through investments in listed company CBs and bonds with warrants (BW).

An FSS official stated, "If any allegations of stock price manipulation or unfair trading are found during this inspection, an investigation will commence immediately. If there are limitations to the investigation, we will cooperate with the prosecution."

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