Prosecutors Indict NH Investment & Securities, Hana Bank Employees, and Others in Optimus Fund Sales Case

Suspected Involvement in Fund Redemption Money Recycling
Investigation Continues Regarding Lobbying Allegations in Political Circles

Optimus Asset Management office, Gangnam-gu, Seoul. [Photo by Yonhap News]

[Asia Economy Reporter Choi Seok-jin] Employees of NH Investment & Securities, the distributor of the Optimus Asset Management (Optimus) fund, and Hana Bank, the custodian, have been brought to trial.

Along with a former executive of the Korea Communications Agency who invested a large sum in Optimus, Kim Jae-hyun, the CEO of Optimus, who is already under arrest and trial, and the Optimus corporation have also been additionally indicted.

According to the legal community on the 30th, the Economic Crime Criminal Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Joo Min-cheol) indicted two Hana Bank Custody Sales Department employees, Jo (52) and Jang (51), without detention on charges of violating the Capital Markets Act and breach of duty on the 28th for their involvement in the circular payment of redemption funds of the Optimus fund.

Jo was also charged with aiding fraud (aiding and abetting fraud under the Special Act on the Aggravated Punishment of Specific Economic Crimes) by entering into a custody contract in May last year despite knowing the abnormal fund operation, amounting to approximately 14.3 billion KRW. Under the principle of corporate liability, Hana Bank as a corporation was also indicted.

According to the prosecution, they are accused of causing financial benefits to fund beneficiaries and losses to other fund investors by participating three times between August and December 2018 in using funds from other entrusted funds to cover 9.2 billion KRW in redemption payments for the Optimus fund.

It was revealed that when the redemption payments for the Optimus fund did not arrive on time, they withdrew funds from other funds to pay returns to Optimus fund investors.

The prosecution also indicted three employees from the product planning department of NH Investment & Securities, which sold the Optimus fund, without detention on charges of violating the Capital Markets Act.

They are accused of providing post-facto compensation amounting to approximately 120 million KRW to Optimus fund investors eight times from December 2019 to June last year to induce unfair sales such as "guaranteed fixed returns" without justifiable reasons (violation of the Capital Markets Act).

Article 55 of the Capital Markets Act prohibits acts of compensating investors for losses after the fact, and Article 445 (Penalties) stipulates that violations may be punished by imprisonment of up to three years or a fine of up to 100 million KRW.

Additionally, the prosecution indicted Choi (59), former head of the Fund Management Division at the Korea Communications Agency, without detention on charges of obstructing the proper and fair fund management of the agency through abuse of authority, including "selection and management of investment products."

Choi was investigated to have disguised the Optimus fund, which was not a fixed-income product, as a fixed-income product.

The Optimus corporation and CEO Kim Jae-hyun were also additionally indicted. Kim and others are charged with using funds from related parties, including CEO Kim or corporate funds, to pay approximately 2.4 billion KRW in redemption payments that should have been paid by private bond issuers in two instances between August and December 2018 (violation of restrictions on transactions with interested parties and prohibition of unsound business practices under the Capital Markets Act).

In early August last year, the Financial Supervisory Service submitted investigative reference materials on Hana Bank, the custodian of the Optimus fund, to the prosecution. Subsequently, the prosecution conducted raids on Hana Bank on September 24 and on the Korea Communications Agency on October 16 of the same year and has been investigating. Additionally, on April 23 of this year, NH Investment & Securities, the distributor of the Optimus fund, was raided.

Meanwhile, the prosecution stated that investigations into allegations of political lobbying by the Optimus advisory group revealed in the "Fund Defect Remedy Document" are ongoing.

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