The Lime Redemption Crisis: What Happened at Daishin Securities That Day...

Daishin Securities Yeouido Bull Statue

[Asia Economy Reporter Junho Hwang] Victims of the Lime fund have submitted a request for retrial to the court, urging a reinvestigation. Although the prosecution conducted two investigations and issued two non-prosecution decisions regarding allegations that Daishin Securities arbitrarily canceled redemption orders by unauthorized use of victims' IDs and passwords, it was judged that a reinvestigation is necessary. Daishin Securities has responded to these allegations by explaining the situation regarding the redemption cancellations.

At the end of September 2010, Lime Asset Management announced a suspension of redemptions and stated that redemption orders would be accepted on a first-come, first-served basis. The funds subscribed through Daishin Securities at that time allowed redemption requests only once a month. To improve this situation, Daishin Securities requested Lime Asset Management to change the regulations to allow daily redemption requests.

Then, around 11:06 AM on October 2, Lime Asset Management sent an email to Daishin Securities' Product Planning Department stating that it would change the terms to allow daily redemption requests for a total of 11 funds. Since the regulation change was possible, Daishin Securities decided to accept redemption requests. On the same day, according to the changed regulations, Daishin Securities' branches received redemption requests totaling 48.6 billion KRW from 203 investors. Around 5:09 PM, Daishin Securities' Product Planning Department uploaded the redemption request data to the Korea Securities Depository's (KSD) E-safe system. Less than ten minutes later, at around 5:20 PM, Lime Asset Management initially approved the redemption requests on the KSD E-safe system.

However, at around 6:29 PM, Lime Asset Management changed the status to 'disapproved.' Lime Asset Management stated, "There is an issue with fairness to other investors if redemptions are allowed," and notified Daishin Securities that it would cancel the regulation change and would not respond to redemptions. Accordingly, around 7 PM, Daishin Securities informed each branch again about the cancellation of the regulation change. By 7:27 PM, the redemption requests were automatically canceled due to the KSD E-safe system's closing process. As the regulation change was canceled, the redemption requests were not processed. Daishin Securities stated that the party who canceled the regulation change at that time was Lime Asset Management. At around 8:22 PM, Lime Asset Management sent an email to Daishin Securities with an attached official letter stating, "We cancel the regulation changes for the 11 funds and request the cancellation of today's redemption requests and customer notification."

The next day, on the 4th, around 1 PM, Lime Asset Management sent a second official letter to Daishin Securities specifying the detailed reasons for canceling the fund regulation changes. Around 2 PM on the same day, Daishin Securities delivered the second official letter to each branch. They then announced that they would cancel the orders in their internal HTS system called ‘Cybos.’ Subsequently, a Daishin Securities Product Planning Department employee changed the status of redemption requests from 'normal' to 'canceled' in the business-use Cybos system. This was a measure to resolve discrepancies between the KSD E-safe system and the internal computer system regarding redemption requests.

Later, some Lime victims filed a complaint against Daishin Securities and related employees at the Seoul Southern District Prosecutors' Office in July 2020. Although there was a non-prosecution decision (no charges) by the Seoul Southern District Prosecutors' Office in January last year, the complainants appealed. In August of the same year, the Seoul High Prosecutors' Office ordered a reinvestigation. The prosecution's conclusion after two investigations was 'no charges.'

The prosecution stated, "The cancellation procedure for the redemption requests in this case was carried out by a Daishin Securities Product Planning Department employee who accessed the 'business-use Cybos system' using their own employee number and password, checked the order details by branch, and then changed the status of individual orders." They added, "the employee's handling of the work was merely correcting the internal computer system to reflect the externally canceled redemption requests," and judged that "there is no evidence to support the complainants' claims of unauthorized use of personal information."

Regarding this, an anonymous financial investment industry insider analyzed, "This case appears to be due to Lime Asset Management's cancellation of the regulation change, which made it impossible to process investors' redemption requests," and added, "Only the asset management company can cancel the regulation change, and the sales company can be seen as simply correcting the internal computer system to resolve discrepancies between the KSD and internal system redemption request records."

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