NH Investment Employee Attends Optimus Trial... Will Kim Jaehyun Face Additional Fraud Charges?

Prosecutors Request NH Investment & Securities Product Planning Head as Witness... Easier to Prove Illegal Acts if 'Meaningful Testimony' Emerges

[Image source=Yonhap News]

[Asia Economy Reporter Baek Kyunghwan] An NH Investment & Securities employee will appear as a witness in the trial concerning the suspension of redemptions of the Optimus Asset Management (Optimus) private equity fund. NH Investment & Securities, as the main fund distributor that sold over 80% of the 500 billion KRW balance of Optimus funds, is drawing attention to whether the connection between Optimus CEO Kim Jae-hyun and NH Investment & Securities will be revealed.

According to the legal community on the 4th, the prosecution applied on the 2nd to summon former NH Investment & Securities Product Planning Department head Jeon as a witness in the Optimus trial. The Optimus management was indicted last July on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act, with the third hearing scheduled for the 12th. Investigations into lobbying allegations involving political and business circles are ongoing separately from CEO Kim’s fraud charges.

Former head Jeon is known to have participated in the review and approval processes of the Optimus fund products. He is also the person who directly heard product explanations from CEO Kim. Previously, after connections were established between NH Investment & Securities President Jung Young-chae and Optimus advisor Kim Jin-hoon, former director of the Military Mutual Aid Association, CEO Kim explained the products to former head Jeon and fund sales began. With sales starting at NH Investment & Securities, the entrusted assets of Optimus funds rapidly increased from around 200 billion KRW in 2018 to approximately 470 billion KRW by the end of 2019.

The prosecution plans to prove the fraud charges against CEO Kim and other Optimus executives based on the fund product proposal submitted by Optimus to NH Investment & Securities during the trial. The proposal stated that they would purchase public institution sales bonds from entities such as Korea Expressway Corporation, Korea Land & Housing Corporation, and Korea Rail Network Authority, but in reality, funds were embezzled through poor-quality private bonds of unlisted companies. CEO Kim also appeared on NH Investment & Securities’ internal broadcast to promote his company’s private equity funds.

NH Investment & Securities filed a complaint with the prosecution in June accusing Optimus management of fraud and other charges, and it is highly likely that they will shift responsibility to the Optimus executives during the trial. At the recent National Assembly audit by the Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, President Jung and former head Jeon emphasized their status as “victims,” stating that the suspicions were “based solely on CEO Kim’s statements.”

Because of this, there is a possibility that former head Jeon will provide significant testimony. Previously, a Financial Supervisory Service employee who appeared as a witness in the second hearing gave detailed testimony about CEO Kim’s evidence concealment. The Financial Supervisory Service is also being criticized for failing to monitor the fund’s insolvency in the Optimus incident.

On the other hand, CEO Kim recently told the prosecution that “the person who connected NH Investment & Securities as the fund distributor during the period when Optimus’s insolvency was worsening last year was former Optimus Alternative Investment CEO Jung Young-je.” This effectively marks the beginning of a blame game among Optimus executives. In the first and second hearings, CEO Kim, Optimus director Yoon Seok-ho, and second-largest shareholder Mr. Lee did not agree to use each other’s statements as evidence.

A lawyer in Seocho-dong predicted, “Since the person responsible for the fund at NH Investment & Securities may provide detailed testimony about the fraudulent attempts by Optimus management, and since NH Investment & Securities also filed a complaint accusing them of fraud, there should be no major issues in proving the executives’ illegal acts.”

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