NH Investment & Securities to Pay 100% Principal on Optimus...Lawsuits and Reimbursement Claims Filed Against Hana Bank and KSD

Temporary Board Meeting on the 25th: '100% Principal Payment to General Investors of Optimus Fund'
To Preserve Subrogation Rights, Transfer of Customer Beneficiary Certificates and Related Rights Instead of 'Contract Cancellation' Establishes 'Beneficiary Certificate Holder' Status
Plans to File Compensation Lawsuit and Subrogation Claims Against Hana Bank and Korea Securities Depository

[Asia Economy Reporter Lee Seon-ae] NH Investment & Securities announced on the morning of the 25th that it held an extraordinary board meeting and decided to pay 100% of the principal to general investor clients of the Optimus Fund in order to respect the basic intent of the Dispute Mediation Committee's decision and faithfully implement customer protection measures.

◆ Respecting the Basic Intent of the Dispute Mediation Committee's Decision and Faithfully Implementing Customer Protection Measures

NH Investment & Securities explained, "Since the mediation proposal by the Dispute Mediation Committee on April 5, we have held eight board discussions over two months and made a carefully considered decision to find the best way to protect customers, which is the core value of financial companies, as well as to enhance shareholder value."

The recipients of the principal refund under this decision are 831 general investors (96% of all clients), with a total payment amount of 278 billion KRW. NH Investment & Securities plans to pay the principal as soon as possible once individual agreements with customers are signed.

Earlier, immediately after the suspension of redemptions of the Optimus Fund last year, NH Investment & Securities took initial customer protection measures by providing liquidity support amounting to 177.9 billion KRW, equivalent to 45% of the fund balance. With this board decision, NH Investment & Securities will complete the full payment of the principal by making additional payments on top of the liquidity advance already paid.

This decision is a form of private agreement in which the company returns the principal to customers and acquires the beneficiary certificates and related rights from them, thereby securing the status as the owner of the beneficiary certificates. Although the form differs from the 'contract cancellation' recommended by the Dispute Mediation Committee, the practical effect for customers is essentially the same, and for the company, it is a decision to preserve the right of recourse against other institutions with significant responsibility in this matter.

◆ Plans to File Damage Compensation Lawsuits and Claims for Recourse Against Hana Bank and Korea Securities Depository

Based on the rights acquired through private agreements with customers, NH Investment & Securities plans to file damage compensation lawsuits and claims for recourse against Hana Bank, the custodian bank jointly responsible, and Korea Securities Depository, the administrative management company.

In particular, NH Investment & Securities acknowledges full responsibility for failing to fully fulfill its customer protection duties as a simple distributor responsible for investment brokerage services. However, it holds the position that Hana Bank, as the custodian bank responsible for monitoring fund operations, must bear appropriate responsibility.

Hana Bank was the only company that could have known from the investment proposal stating that the fund would contain more than 95% public institution receivables that the fund was actually operated solely with private bonds from the time of its launch. In fact, the Optimus Fund showed abnormal operation by concentrating 1.3 trillion KRW, equivalent to 80% of the cumulative sales amount of 1.6 trillion KRW, in private bond investments of six companies including Art Paradise. Furthermore, in 2018, Hana Bank illegally intervened by lending its own reserve funds free of charge three times to cover the fund's redemption shortfall, preventing redemption suspension. The Financial Supervisory Service subsequently reported Hana Bank to the prosecution on charges of aiding fraud.

Additionally, Korea Securities Depository changed private bonds to public institution receivables on asset statements at the request of the asset management company, causing distributors and investors to mistakenly believe that the fund was being operated normally for a long time.

Through such claims for recourse, NH Investment & Securities plans to ensure that each institution fulfills its appropriate level of responsibility and focus the company's capabilities on increasing the fund asset recovery rate to preserve shareholder value.

Meanwhile, NH Investment & Securities is taking the Optimus incident as a lesson and is comprehensively improving its financial product verification and sales processes. Private placement products are integrated with public offerings to significantly raise review standards, enhance the expertise of screening officers, and greatly strengthen post-management systems by expanding monitoring frequency and risk management scope.

Jung Young-chae, CEO of NH Investment & Securities, stated, "With today's board decision as a turning point, we hope our company can uphold a customer-centric management philosophy and regain customer trust. We will make every effort to restart with deep reflection and renewed determination so that the entire organization can quickly return to normal operations and respond to industry changes and new business opportunities."

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