Like Optimus, 'Mistaken Contract Cancellation' Not Allowed... Angry Discovery Victims (Comprehensive)

Optimus and Lime Allowed, but Discovery Not Allowed for 'Mistaken Contract Cancellation'

[Asia Economy Reporter Park Sun-mi] As the Financial Supervisory Service (FSS) recommended that IBK Industrial Bank of Korea compensate 40-80% of the investment losses from the Discovery Fund it sold, criticism is mounting from private fund victims who had expected a full principal refund based on "contract cancellation due to mistake." The FSS drew a clear line, stating that the situations of the Lime Trade Finance Fund, the Optimus Fund?which had full principal refund decisions?and the current Discovery Fund are distinctly different.

According to the financial sector on the 26th, the FSS decided on a basic compensation ratio of 50% for the US Fintech Global Bond Fund (Global Bond Fund) and 45% for the US Fintech Real Estate Secured Debt Fund (Real Estate Secured Debt Fund) regarding compensation liability for incomplete sales of the Discovery Fund referred to the Financial Dispute Mediation Committee (FDMC). Accordingly, it recommended applying compensation ratios of 64% and 60% respectively to two investors. It also announced that it recommends applying compensation ratios ranging from 40% to 80% to the remaining investors who suffered losses.

The FDMC recognized compensation liability for violations of the suitability principle and duty of explanation by sales staff when deciding the basic compensation ratio for fund victims. The sales staff did not first confirm the investors' risk profiles before the fund subscription was decided, then falsely recorded them as "aggressive investment type," and emphasized that the product was safe, investing in U.S. bonds, but omitted explanations about related risk factors and the possibility of principal loss.

However, it firmly rejected the applicability of contract cancellation due to mistake, which would allow a full principal refund. This is a completely opposite decision from the Lime and Optimus funds, where contract cancellation due to mistake was applied, resulting in full principal refunds. Article 109 of the Civil Act on contract cancellation due to mistake allows cancellation if the seller failed to properly inform important matters to the extent that the contract was not originally concluded.

An FDMC official stated, "We reviewed whether the Discovery Fund falls under contract cancellation due to mistake as claimed by the victims, but judged that the reasons for claiming mistake were not important enough to cancel the contract."

"This is not a case of contract cancellation due to mistake"

He explained, "If the bonds underlying the returns do not actually exist and investors unknowingly subscribe to the product, or if the fund was already insolvent causing losses but this was not disclosed and sold fraudulently, contract cancellation due to mistake applies. However, since the Discovery Fund case involves IBK arbitrarily writing customers' investment profiles and violating the duty of explanation during the sales process, applying contract cancellation due to mistake is difficult."

IBK Industrial Bank of Korea stated that it will accept the FSS FDMC's recommendation of a 40-80% compensation ratio. IBK said, "We plan to proceed with related procedures according to the decision" and "We will continue to strive to protect customers."

On the other hand, Discovery Fund victims are protesting, saying that by not making a contract cancellation due to mistake decision this time, the FSS has neglected its consumer protection function and shown that it is not free from financial industry influence.

The Discovery Fund Fraud Victims Countermeasure Committee said, "The government should separate the FSS's financial supervision function and financial consumer protection function to independently perform the financial victim protection function," and "We demand voluntary mediation with IBK and the parties involved based on a new compensation standard, and if they do not comply, we will take collective action."

Meanwhile, recently NH Investment & Securities decided to pay 100% of the principal to investors who suffered losses after investing in the Optimus Fund, enabling investors to receive their principal back as soon as they sign an agreement with NH Investment & Securities. The number of customers eligible for principal refund is 831, with a total payment amount of 278 billion KRW. However, while NH Investment & Securities announced it would refund the full principal to Optimus Fund investors, it did not accept the FDMC's contract cancellation due to mistake decision as the reason for the full refund.

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