Shinhan Investment Corp. Decides to Compensate Lime Fund Loss Customers Up to 70% of Principal

Voluntary Compensation Plan Established for Lime Domestic Fund and Trade Finance Fund
Organizational Restructuring Also Implemented... "We Will Become a Trustworthy Financial Company"

[Asia Economy Reporter Minwoo Lee] Shinhan Financial Investment has decided to compensate customers who suffered losses from the Lime fund redemption suspension incident up to 70% of their principal.

On the 19th, Shinhan Financial Investment announced on the 20th that it had finalized a voluntary compensation plan regarding customer losses caused by the sale of Lime funds through a board meeting. Accordingly, Shinhan Financial Investment plans to compensate a certain percentage of the loss amount or principal for the Lime domestic fund and the trade finance fund.

Specifically, for the Lime domestic fund and the open-type trade finance fund, 30% of the principal (20% for corporate professional investors) will be compensated, and for the closed-type trade finance fund, 70% of the principal (50% for corporate professional investors) will be compensated. The compensation ratio was applied differently considering that the closed-type fund, which does not allow voluntary redemption, had insufficient explanations in the investment prospectus. A recalculation will be made later based on the Financial Supervisory Service’s dispute mediation results, and the final compensation amount will be decided after agreement with customers along with the voluntary compensation plan. A Shinhan Financial Investment official stated, "We are the first among the 19 distributors to present a voluntary compensation plan to practice responsible management and restore customer trust," adding, "We will continue to do our best to recover customer assets related to Lime through legal procedures and other means."

They also decided to implement structural improvements throughout the entire product-related process. To hold the department responsible for the product issues, the trust department’s supply of new alternative investment products will be suspended for a certain period, focusing on resolving existing problems. The Prime Brokerage Service (PBS) division will significantly reduce its business scope by concentrating on providing basic services such as fund lending, stock lending, asset custody, and settlement for specialized private equity funds rather than pursuing new businesses.

Organizational restructuring of the product supply and product management departments will also be promoted. The product supervision department, the first of its kind in the industry, will be moved to the Financial Consumer Protection Headquarters and operated under an independent Chief Consumer Officer (CCO) system. To unify product supply and management functions, the trust department and the wrap management department under the product supply headquarters will be reassigned to a headquarters overseeing product manufacturing, supply, and management.

Additionally, risks across all company operations will be analyzed and systematized. To this end, a dedicated operational risk organization will be established, and experts responsible for it will be separately recruited.

Youngchang Lee, CEO of Shinhan Financial Investment, emphasized, "To prevent recurrence of product issues, we will focus all company resources on establishing a strong product management system by expanding the supply of internally verified proprietary products through internal product manufacturing lines such as the Investment Banking (IB) division and Sales and Trading, and by establishing external asset manager management standards." He added, "Under the customer-centric principle, we will fundamentally change everything related to products, including organization, systems, and culture, to become a trustworthy financial company and a company that does its best to satisfy customers."

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