Discovery Fund Countermeasure Committee and IBK CEO Yoon Jong-won Meeting Ends Without Results

IBK, Board Meeting on the 11th to Discuss Compensation Measures for Damages

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] The meeting between Yoon Jong-won, CEO of IBK Industrial Bank of Korea, and the victims of the Discovery Fund ended without any results.

The "IBK Industrial Bank of Korea Discovery Fund Fraud Victims Countermeasure Committee" (Countermeasure Committee) held a press conference after meeting with Yoon Jong-won at the IBK Finance Tower in Euljiro, Jung-gu, Seoul on the afternoon of the 8th, stating that the bank rejected all four demands, including full compensation for the damages. The meeting lasted about 1 hour and 40 minutes, starting around 3:10 PM.

During the meeting, the Countermeasure Committee demanded the contract be nullified, arguing that the fund sales constituted a form of "deception" amounting to fraud, and requested an advance payment of 110% of the principal including interest. This meeting was notable as the first case where private fund victims met with the CEO of the selling company.

The meeting reportedly proceeded in a somewhat tense atmosphere, with raised voices.

The Countermeasure Committee stated that since IBK Industrial Bank of Korea sold the investment products fraudulently by failing to sufficiently inform about the risks, the principal and interest must be fully refunded. The committee claimed, "IBK Industrial Bank of Korea breached its duty of good faith and trust in its relationship with customers, causing financial damage."

Yoon Jong-won, the new president of IBK Industrial Bank, is delivering his inaugural speech at the inauguration ceremony held on the 29th at the IBK headquarters in Euljiro, Jung-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

IBK Industrial Bank of Korea was initially expected to propose an advance payment of 50% of the invested principal, but on this day, it only gave a general response and did not accept the Countermeasure Committee’s demands.

A representative of the Countermeasure Committee said, "CEO Yoon said he would do his best without evading the bank’s responsibility and would meet again for further discussions if necessary."

However, the committee expressed regret, stating, "It is regrettable that CEO Yoon shifted all responsibility for damage countermeasures to the board of directors," and also expressed disappointment over the plan to resolve the issue through the Financial Supervisory Service’s dispute mediation and subsequent legal action.

The Discovery Fund is a private fund planned by the domestic asset management company Discovery Asset Management. The U.S. asset manager DLI operates the fund using investment funds raised from the domestic financial sector. Between 2017 and 2019, IBK Industrial Bank of Korea sold Discovery US Fintech Global Bond Fund and Discovery US Real Estate Senior Secured Bond Fund worth 361.2 billion KRW and 318 billion KRW respectively. It is the largest seller of this fund. Other sellers include Daishin Securities and Hana Bank, which also sold some of these products.

The problem arose last April when DLI was found to have falsified reports on actual returns and asset values, leading to a complaint filed by the U.S. Securities and Exchange Commission. As the assets managed by DLI were frozen, domestic investors have been unable to recover their investments. Currently, about 91.5 billion KRW is suspended from redemption.

According to the Countermeasure Committee, the number of Discovery Fund victims exceeds 100.

The committee also demanded at the meeting that CEO Yoon hold a public hearing for the victims, but Yoon did not accept this request.

Furthermore, the committee requested an opportunity to speak at the IBK Industrial Bank of Korea board meeting, but this was also refused. The committee stated, "We were not informed of the board meeting time or the agenda items." CEO Yoon did not comment on the request for severe disciplinary action (dismissal or removal) against those responsible for selling the fund.

IBK Industrial Bank of Korea is scheduled to hold an extraordinary board meeting on the 11th to discuss advance payment measures for Discovery Fund victims.

The Countermeasure Committee announced that it will hold a rally in front of IBK Industrial Bank of Korea at the time of the board meeting to physically ensure attendance at the meeting.

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