Financial Supervisory Service Begins Assessing Fund Size Including Osstem Implant

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] As the recovery of funds from Ostem Implant, the largest embezzlement case in South Korea, remains sluggish, investor damage is spreading rapidly. Concerns are rising not only for direct investors but also for indirect investments through funds, prompting financial authorities to begin assessing the scale of fund-related damages.

On the 7th, the Financial Supervisory Service (FSS) announced that it requested over 70 domestic asset management companies the previous day to submit information on funds including Ostem Implant and the number of subscribers. An FSS official stated, "We requested data from asset management companies on funds that include Ostem Implant," adding, "Once we receive the data, we will verify and aggregate the contents to understand the extent of the damage."

Trading of Ostem Implant has been suspended since the embezzlement was disclosed on the 3rd. The Korea Exchange plans to decide by the 24th of this month whether Ostem Implant will be subject to a delisting review. Lee Mo (44), the financial manager of Ostem Implant who was arrested by the police on the 5th, embezzled 188 billion KRW, equivalent to 92% of the company's equity capital. So far, the recovered amount totals 55 billion KRW, including 30 billion KRW in gold bars and 25 billion KRW in stock accounts. Ostem Implant expressed optimism about recovering a significant portion of the embezzled funds soon and expected a positive net income for last year. However, since the recovered amount is less than 30%, accounting losses are inevitable. Even if Ostem Implant is excluded from the delisting review and trading resumes, a decline in stock price is unavoidable.

As of the end of last year, Ostem Implant had 19,856 minority shareholders. When including Exchange-Traded Fund (ETF) investors, the number of investors is expected to increase further. According to financial information provider FnGuide, as of the end of the third quarter last year, there were 106 domestic funds holding Ostem Implant. The largest holding is the ‘Mirae Asset TIGER Medical Device Securities ETF,’ with 7.65% of its total assets invested in Ostem Implant shares. Other funds include ‘Fine Asia Turnaround’ at 6.93%, ‘Mirae Asset TIGER KOSDAQ 150 Biotech’ at 3.85%, ‘KB Small and Mid-Cap Focus’ at 3.31%, and ‘KB Value Choice 3’ at 1.66%.

The securities and banking sectors have begun suspending sales of funds including Ostem Implant. Daishin Securities announced yesterday afternoon that it would halt new purchases of 63 funds containing Ostem Implant, including the KB Value Focus 30 Securities Investment Trust (bond mixed), to protect customer profits. Mirae Asset Securities also announced on the same day that it would suspend sales of funds including Ostem Implant. Earlier, Hana Bank had suspended sales of 77 funds containing Ostem Implant on the 5th.

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