Optimus, Revealed as a Planned 'One-shot' Scheme

[Image source=Yonhap News]

[Asia Economy Reporters: Ko Hyung-kwang, Park Ji-hwan, Koo Eun-mo, Kim Hyung-min] It has been increasingly revealed that Optimus Asset Management intended from the beginning to deceive investors and distributors for a 'one-shot' gain. Not only did they arbitrarily invest in risky assets instead of the promised assets in the investment proposal, resulting in massive losses, but the final destination of the invested funds remains unclear. As investors and distributors bear the losses entirely, legal battles over responsibility are expected to intensify.

◇ Deceiving and raising investment funds from the start = It has been revealed that Optimus Asset Management planned from the outset to invest in risky assets such as real estate and development projects while raising fund capital. However, the investment proposal stated that more than 95% of the fund capital would be invested in 'public institution accounts receivable.' The target yield was also set relatively low at 3-4.5% interest.

When the Financial Supervisory Service (FSS) conducted an on-site inspection and checked accounts and documents, it was found that Optimus had no actual investment record in public institution accounts receivable. Instead, 98% of the fund capital (523.5 billion KRW as of the evaluation on the 1st) was invested in private bonds of unlisted companies with no real business entity. These companies include CPNs (205.3 billion KRW), Art Paradise (203.1 billion KRW), Rafique (40.2 billion KRW), and Daebu DK AMC (27.9 billion KRW), all managed by executives of Optimus Asset Management.

These four companies acted as issuers of private bonds and served as 'transit points' through which Optimus fund capital was transferred to various risky assets. The fund capital was distributed to about 60 investment destinations through these four companies. The investments were nominally in real estate development, stocks, and loans, amounting to approximately 300 billion KRW.

More than 200 billion KRW of the invested funds could not even be accounted for in terms of usage. The FSS stated, "The figures are based on information submitted by Optimus, so the investment amounts are likely inflated," and "Many assets have unclear rights, so the possibility of recovery is low." Optimus has also admitted to forging and fabricating various documents to disguise these 'shell company' bonds as public institution accounts receivable.

The Seoul Central District Prosecutors' Office Investigation Division 1 recently indicted four executives, including CEO Kim Jae-hyun of Optimus Asset Management, and arrested Yu, an advisor to a cosmetics company that invested in Optimus. They also summoned and investigated Lee, a 36-year-old lawyer who is the wife of Optimus director and lawyer Yoon Seok-ho and a former Blue House administrative officer.

◇ Investors' legal actions = As of the 21st, Optimus Asset Management's 46 funds had sales totaling 515.1 billion KRW, of which 240.1 billion KRW are currently suspended from redemption. The remaining 22 funds are composed of assets identical or similar to those in the redemption suspension funds, making redemption suspension inevitable upon maturity.

Redemption suspensions began just before the FSS's on-site inspection and have continued with other funds subsequently. Of the total sales, 84% (432.7 billion KRW) were sold through NH Investment & Securities. This was followed by Hi Investment & Securities (32.5 billion KRW), Korea Investment & Securities (28.7 billion KRW), Cape Investment & Securities (14.8 billion KRW), Daishin Securities (4.5 billion KRW), and Hanwha Investment & Securities (1.9 billion KRW).

Korea Investment & Securities decided earlier this month to unconditionally prepay 70% of the principal to investors, and some investors have already received this amount. However, NH Investment & Securities, having a significantly larger number of fund subscribers and sales volume, has delayed the prepayment plan.

Among investors demanding full compensation, there is mounting pressure on distributors through dispute resolution applications and preparations for lawsuits to recover their investments. Dispute resolution applications related to Optimus funds increased sharply from 27 cases at the beginning of this month to 69 cases as of the 17th. One Optimus fund investor said, "I have applied for dispute resolution with the Financial Supervisory Service and am awaiting the results of preliminary compensation," adding, "If 100% of the investment is not guaranteed, I plan to file a lawsuit through a law firm, even if it takes time."

Some investors have already initiated legal action through law firms. Law firm Okims, representing plaintiffs, stated, "We are proceeding with civil lawsuits against Optimus, NH Investment & Securities, Hana Bank, and the Korea Securities Depository," and "The number of individual investors wishing to participate in the lawsuits is steadily increasing."

◇ Korea Financial Investment Association (KOFIA) "Strengthening Compliance Monitoring" = To prevent private fund accidents, KOFIA Chairman Na Jae-cheol and asset management company chairpersons declared at the Financial Investment Center in Yeouido that they will actively cooperate to prevent recurrence. The financial investment industry pledged to sincerely implement improvements in financial authorities' systems, strengthen internal controls and compliance monitoring functions, prevent incomplete sales, and continue self-innovation and self-purification efforts.

By 10 a.m. on the day, 100 asset management companies had expressed their willingness to participate, with more expected to join. KOFIA plans to support the distribution of work manuals, training for compliance officers, and sharing of best practices in internal control. Chairman Na Jae-cheol appealed, "Let this incident be an opportunity for private funds to be reborn and maximize their positive functions," and "Please do not lose interest and affection for private funds."

Professor Kim Bong-soo of the Department of Law at Sungshin Women's University stated at a forum held at the National Assembly that "Since the amendment of the Capital Markets Act in July 2015, the establishment of private fund management companies changed from a licensing system to a registration system, and the registration requirements were reduced from 6 billion KRW to 2 billion KRW in capital, effectively rendering the establishment requirements meaningless," and argued, "The establishment of private fund management companies should revert to a licensing system or have stricter registration requirements."

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