Shin Young followed by Shinhan Investment Corp 'Lime Compensation'... What about other sellers?

[Image source=Yonhap News]

[Asia Economy Reporter Koh Hyung-kwang] As Shinhan Financial Investment takes responsibility for selling Lime Asset Management's bad funds and begins voluntary compensation for victims, attention is focused on additional compensation plans to be announced by other distributors such as banks.

According to the financial investment industry on the 21st, Shinhan Financial Investment recently held a board meeting and finalized a voluntary compensation plan for investors who subscribed to Lime funds through the company. The compensation rates are 30% for domestic funds and open-type trade finance funds (20% for corporate professional investors), and 70% for closed-type trade finance funds (50% for corporate professional investors). Shinhan Financial Investment explained that the compensation ratio was applied differently for the closed-type trade finance funds, which do not allow voluntary redemption, considering that there was insufficient explanation despite the need for thorough disclosure in the investment prospectus. This acknowledges the possibility of incomplete sales. Shinhan Financial Investment will soon finalize the compensation amount through an agreement with subscribers based on the voluntary compensation plan. If the Financial Supervisory Service's dispute mediation results are released in the future, some investors' compensation may increase through recalculation.

This voluntary compensation plan is the second decision among the 19 Lime fund distributors, following Shinyoung Securities. Shinhan Financial Investment sold 324.8 billion KRW out of 1.6679 trillion KRW worth of Lime funds with suspended redemptions, ranking second in scale after Woori Bank (357.7 billion KRW). Next are Shinhan Bank with 276.9 billion KRW, Daishin Securities 107.6 billion KRW, Meritz Securities 94.9 billion KRW, and Shinyoung Securities 89 billion KRW. Shinyoung Securities announced on March 23 that it would compensate for approximately 89 billion KRW worth of funds it sold. The compensation amount is known to be about 40 billion KRW, roughly half of the sales amount.

Other distributors are also accelerating compensation for investors. Seven banks including Woori, Shinhan, Hana, Industrial, Busan, Gyeongnam, and Nonghyup are promoting a plan to first compensate Lime fund investors for their losses. A plan is being considered to pre-compensate 30% of the loss amount and also provide 75% of the fund's valuation amount as an advance payment. For example, if the investment principal decreases from 200 million KRW to 100 million KRW, 30% of the loss amount of 100 million KRW, i.e., 30 million KRW, would be compensated first, and 75% of the fund valuation amount of 100 million KRW, i.e., 75 million KRW, would also be provided.

However, some distributors are still struggling to present voluntary compensation plans due to concerns about breach of trust or issues with compensation ratios. Daishin Securities, which faced controversy for selling Lime funds on a large scale at one branch, said, "We are reviewing various aspects, but unlike Shinhan Financial Investment, no official inspection or investigation results have been announced yet, so it is not the stage to clarify our position," and remained reserved. Financial companies with low fund sales ratios are reportedly considering presenting compensation plans similar to those of other distributors after observing their trends.

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