Optimus Scandal, Busy Drawing Lines, 'Sales, Trusteeship, and Office Management Agents'

Top Seller NH Investment, Final Decision Deferred on Victim Pre-Compensation
Depository and Hana Bank Also Face Responsibility Debate

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] In relation to the Optimus scandal, where concerns are rising over the suspension of redemptions for private equity funds worth up to 500 billion KRW, sales companies, custodian banks, and administrative service providers are busy distancing themselves from responsibility. These related parties, which earned commission revenue during the sale of Optimus funds, are being criticized for shirking responsibility by blaming only the asset management company once the incident occurred.

According to financial authorities and the financial investment industry on the 4th, NH Investment & Securities, the largest seller of Optimus funds, has yet to decide on a pre-compensation plan for victims. At the regular board meeting held on the 23rd of last month, a plan to pre-compensate 50% of the investment was discussed, but due to emerging issues of breach of fiduciary duty among board members, an extraordinary board meeting will be held this month to reconsider the matter.

NH Investment & Securities has requested the Financial Supervisory Service for a "non-action opinion letter," a confirmation that pre-compensating 50% of the investment to Optimus fund investors will not result in sanctions for violating the Capital Markets Act and the Financial Investment Business Supervision Regulations. As a listed company, NH Investment & Securities is mindful of the possibility that shareholders may sue board members for breach of fiduciary duty citing performance decline if pre-compensation is decided.

However, Optimus victims are demanding compensation close to 100%, so considerable difficulties are expected in finding a compromise. A private meeting between NH Investment & Securities President Jung Young-chae and some Optimus victims is scheduled for the 6th, but many believe it will only confirm the differences in their positions regarding compensation discussions.

Investors are currently exploring various ways to recover damages through filing dispute mediation requests with the Financial Supervisory Service and lawsuits. As of the 31st of last month, 140 complaints related to Optimus had been filed with the Financial Supervisory Service. The number has steadily increased, with 48 cases on the 10th and 69 cases on the 17th of last month.

The responsibility of the Korea Securities Depository (KSD), which had previously taken a step back compared to sales companies, is also gaining renewed attention. KSD was in charge of administrative management of fund assets but has maintained the position that it had no inspection obligations.

However, KSD is expected to find it difficult to be completely free from responsibility in this incident, as it modified the name of private company private bonds to public institution revenue bonds at the request of Optimus Asset Management. It is criticized for exacerbating the situation by processing the falsified asset registration change documents submitted by Optimus without proper verification procedures.

The custodian bank, Hana Bank, also seems unlikely to escape responsibility for failing to verify the asset purchase instructions from the asset manager, which involved assets entirely different from the originally promised bonds. A financial investment industry official pointed out, "The custodian bank was in a position to detect Optimus's fraudulent behavior but proper verification procedures were not conducted." Hana Bank argues that regulatory easing on private equity funds limits its monitoring obligations, but industry insiders believe it will bear responsibility at least under Article 244 (Duty of Care) of the Capital Markets Act.

Within financial authorities, there is also a recognition of the responsibility of Hana Bank and KSD. A Financial Supervisory Service official stated, "Custodian banks and administrative service providers are clearly judged to have responsibility for the Optimus scandal, just like sales companies," and added, "The level of sanctions against them will be determined through legal review."

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