Pop Funding Fund Incomplete Sales Controversy... Investors Announce Lawsuit

[Asia Economy Reporter Koh Hyung-kwang] Some investors have claimed incomplete sales and announced legal action in response to the redemption suspension of private equity funds linked to the peer-to-peer (P2P) lending company 'Popfunding,' sold by Korea Investment & Securities and others. Korea Investment & Securities sold Popfunding private equity funds only at its Bundang branch, but investors argue that the company was aware of the risks of the product yet sold it without providing proper explanations to the investors.

According to the financial investment industry on the 14th, the law firm Hannuri plans to file a lawsuit against Korea Investment & Securities this week on behalf of about 90 investors from the Popfunding-linked private equity fund victim countermeasure committee. Baek Young-soo, the committee representative, stated, "The private equity fund seller sold the product without proper due diligence, resulting in the fund's redemption suspension, yet Korea Investment & Securities claims ignorance," adding, "We will submit the complaint to the Seoul Southern District Prosecutors' Office within this week."

The total amount of Popfunding-linked private equity funds sold by Korea Investment & Securities that have suspended redemption is approximately 35.5 billion KRW. Popfunding is a peer-to-peer financial company that provides loans secured by inventory assets of small and medium-sized enterprises such as home shopping companies. Last November, it received praise from Financial Services Commission Chairman Eun Sung-soo at a movable asset finance innovation case meeting held in Paju, Gyeonggi Province.

However, a subsequent inspection by the Financial Supervisory Service uncovered allegations of window dressing through circular financing, and Popfunding is currently under investigation by the prosecution. As of this date, Popfunding's delinquency rate stands at 95.6%, effectively halting its operations.

Regarding the suspension of redemptions of private equity funds due to Popfunding's insolvency, Korea Investment & Securities stated that it was completely unaware of Popfunding's issues beforehand. Korea Investment & Securities said, "We had no prior knowledge of Popfunding's problems, and as a seller, we are structured so that we cannot intervene or be involved in the management," adding, "We are conducting an internal investigation into signs of incomplete sales and will do our best to recover customer funds as the seller."

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