Citizen Group: "Optimus Case, Systemic Failure of the Financial System Is the Core"

The Financial Justice Solidarity, the People's Solidarity for Participatory Democracy's Committee on People's Economy, and the People's Solidarity for Participatory Democracy's Economic and Financial Center held a press conference on the 21st in front of the Financial Supervisory Service in Yeongdeungpo-gu, Seoul, titled "Condemning the Financial Authorities and Financial Companies for Neglecting Responsibility in the Optimus Fund Financial Fraud." / Photo by Moon Honam munonam@

[Asia Economy Reporter Song Seung-yoon] Civic groups have called on the Board of Audit and Inspection to conduct an audit and urged strict institutional reforms to prevent recurrence, stating that financial authorities and financial companies bear significant responsibility for the Optimus Asset Management (Optimus) fund fraud case.

On the morning of the 21st, the People's Solidarity for Participatory Democracy, the Committee on Livelihood Economy of the Lawyers for a Democratic Society (Minbyun), and the Financial Justice Solidarity held a press conference in front of the Financial Supervisory Service, claiming, "The financial companies responsible for purchasing and selling fund assets did not even take minimal responsibility for protecting financial consumers, which is a major cause of the large-scale financial damage caused by the Optimus fund fraud."

The civic groups stated, "There is not much voice considering the fundamental causes of this incident and seeking countermeasures," and emphasized, "The core of the Optimus fund fraud case clearly lies in the overall failure of the financial system that should protect financial consumers."

They argued that along with an audit of the financial authorities by the Board of Audit and Inspection, substantial institutional reforms to strengthen private equity fund regulations and thorough supervision by financial authorities must be implemented. They also stressed the urgent need for legislation on class-action lawsuits and punitive damages to prevent moral hazard among financial companies.

The civic groups pointed out, "If fundamental institutional reforms and thorough financial supervision are postponed again despite this incident, similar cases will recur repeatedly," and stated, "Substantial institutional reforms must be made to strengthen private equity fund investor requirements, prohibit layered and circular structures, and enhance the responsibilities and mutual checks of distributors and custodians."

They continued, "Through strengthening comprehensive investigations of private equity funds, insolvent funds should be promptly eliminated, and measures to reinforce continuous management and supervision must be prepared," adding, "The National Assembly should hasten legislation on punitive damages and class-action lawsuits to prevent moral hazard among financial companies, learning from private equity fund damage cases as a lesson."

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