'Fund Fraud' Optimus Asset Management Under Financial Supervisory Service Inspection Begins

Construction Accounts Receivable Investment Fund
Redemption Postponed for 38.4 Billion KRW

Asset Inclusion Details Falsification
Financial Authorities Begin On-Site Inspection

"Delayed Inspection Despite Detecting Abnormal Fund Signs" Criticism

[Asia Economy Reporters Jihwan Park and Boryeong Geum] A private equity fund investing in construction accounts receivable issued by public institutions such as government offices has once again failed to return money to investors despite the maturity of the fund. Financial authorities have promptly launched an inspection of the fund management company in connection with this redemption suspension incident.

According to financial authorities on the 19th, the Financial Supervisory Service (FSS) began an on-site inspection of Optimus Asset Management, which caused a redemption delay incident involving a 38.4 billion KRW public institution accounts receivable fund. The inspection will primarily focus on verifying the facts related to this incident.

An FSS official stated, "During the on-site inspection, we will listen to explanations from the management company and sales representatives to ascertain the facts," adding, "We also plan to review the results of the written investigation conducted earlier this year." The FSS is expected to investigate the reasons for the redemption suspension and whether there was any forgery or falsification in the asset inclusion details. Since this matter involves forgery, it is highly likely to be transferred to the prosecution for investigation. If fraud charges are ultimately confirmed, investors may cancel the contracts altogether, significantly reducing the loss amount.

On the 17th, Optimus Asset Management sent official letters to NH Investment & Securities and Korea Investment & Securities requesting an extension of maturity for the "Optimus Creator Bond Specialized Private Equity Investment Trust No. 25 and 26." The maturity period for this fund was six months, ending the previous day. NH Investment & Securities, which had the largest sales volume, sold approximately 630 billion KRW worth of products since June last year. Of this, about 200 billion KRW was repaid normally, and approximately 21.7 billion KRW was notified of redemption suspension. About 410 billion KRW worth of funds have not yet matured. Korea Investment & Securities also sold a total of 82.7 billion KRW of related funds, with 16.7 billion KRW notified of redemption deferral. The balance of funds not yet matured is 12 billion KRW. This fund was highly popular among investors due to its perceived stability, to the extent that some wanted to invest but could not.

NH Investment & Securities has also launched its own investigation. They plan to review the assets that were supposed to be included and those actually included, verifying their value. If problems are found, they will determine responsibility and proceed to compensate investors. So far, they maintain that there were no abnormalities in the sales process. A representative from NH Investment & Securities explained, "Protecting customer assets is our top priority, so we will conduct a thorough investigation of the remaining assets during this opportunity," adding, "Since the FSS has also started an inspection, compensation discussions will follow once the results are out."

Within the financial investment industry, there are voices saying that if a management company deliberately forges or falsifies documents, it is difficult for sales companies to detect it easily. An industry insider said, "Forgery and falsification of documents are criminal acts," and added, "If they intended to deceive, it is naturally difficult for sales companies to verify."

From the perspective of financial authorities, the burden has increased as private equity fund redemption suspension incidents have occurred repeatedly recently. The FSS has been criticized for its delayed initial response even after allegations of Ponzi schemes by Lime Asset Management surfaced last year. It was only in February this year, six months after the investigation began, that the FSS announced interim inspection results stating that "Lime Asset Management concealed fund insolvency while selling and executives gained hundreds of billions of KRW in illicit profits." In this case as well, the FSS had identified abnormal cash flow in Optimus but reportedly postponed the inspection timing due to the COVID-19 pandemic.

It is also problematic that this is not the first time Optimus has shown signs of misconduct. Known as a problematic player in the asset management industry, it required continuous monitoring, but management was lax. At the end of 2018, Optimus Asset Management received institutional warnings and measures such as dismissal requests and suspension of duties for former executives due to embezzlement. The former CEO of Optimus Asset Management embezzled tens of billions of KRW by transferring company funds for personal use 423 times between 2013 and 2017. The company also faced controversy for participating in IPO demand forecasting with its own fund without a brokerage license, earning a profit of 43.5 million KRW.

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