Financial Supervisory Service Decides "NH Securities to Fully Refund Optimus Investment Principal"

[Asia Economy Reporter Ji Yeon-jin] A dispute mediation result has been issued ordering the full return of the principal investment for the Optimus Fund sold by NH Investment & Securities. If NH Securities accepts this recommendation, it is expected that approximately 300 billion KRW of principal investment will be returned to general investors.

The Financial Dispute Mediation Committee (FDM Committee) of the Financial Supervisory Service announced on the 6th that it has decided to cancel contracts due to "mistake" for two dispute mediation applications related to the Optimus Fund. Contract cancellation due to mistake is based on Article 109 of the Civil Act, which allows cancellation when a declaration of intention, such as a contract, contains a mistake in an essential part of the legal act. This dispute mediation will be established if the applicant and NH Investment & Securities accept the mediation proposal within 20 days after receipt. Once established, the mediation has the same effect as a court settlement under Article 39 of the Financial Consumer Protection Act.

The FDM Committee recognized that at the time of contract conclusion, it was practically impossible for the Optimus Fund to invest in public institution confirmed trade receivables (with maturities of 6 to 9 months), and that NH Securities, the seller, induced investor mistake by explaining that more than 95% of the investment was in public institution confirmed trade receivables based solely on the asset management company's explanation. Furthermore, it was judged difficult to expect general investors, who applied for dispute mediation, to exercise due care to verify whether investment in public institution confirmed trade receivables was possible, and thus investors were not considered to have gross negligence.

According to the Financial Supervisory Service’s inspection results, Optimus Asset Management had never invested in public institution confirmed trade receivables, and most of the included assets (98%) were confirmed to be private bonds issued by unlisted companies. Additionally, it was revealed that it is practically impossible for a fund to include public institution confirmed trade receivables with maturities of 6 or 9 months or longer as major assets.

Accordingly, the cancellation of the Optimus Fund sales contract was recommended, and NH Investment & Securities, the counterparty to the contract, was advised to return the full principal investment. The FDM Committee stated, “If this mediation is established, voluntary adjustments will be promptly conducted for the remaining investors according to the committee’s decision,” and anticipated, “If smoothly resolved, approximately 300 billion KRW (based on general investors) of principal investment will be returned.”

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