Discovery Asset Management CEO Jang Ha-won Arrested Amid 'Redemption Suspension Crisis'

Court: "Concerns of Evidence Tampering and Flight Risk"
Discovery Official's Warrant Denied

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Byung-don] Jang Ha-won, CEO of Discovery Asset Management (Discovery), who is accused of selling defective funds and using new investments to pay off old ones, has been arrested.

On the 8th, Kwon Ki-man, the judge in charge of warrants at the Seoul Southern District Court, issued an arrest warrant for CEO Jang, who is suspected of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act, citing "concerns about evidence destruction and flight."

However, Kim, a Discovery official who underwent a pre-arrest suspect interrogation (warrant substantive examination) together with Jang, was denied arrest. The judge stated, "Although the charges are serious and there is considerable reason to suspect that the suspect committed the crimes alleged, since the suspect has a fixed residence and it is difficult to see concerns about evidence destruction or flight, it is hard to find necessity and propriety for arrest at this stage."

CEO Jang underwent the warrant substantive examination for about three hours starting at 10:30 a.m. that day and remained silent when reporters asked about the sale of defective funds and whether there were preferential treatments for open-ended funds.

As CEO Jang appeared, waiting victims loudly criticized him, demanding that he admit to the Ponzi scheme.

CEO Jang is currently facing charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act. He is suspected of causing damage to investors by selling products while hiding the fact that the funds could become defective.

The Discovery fund is a financial product managed by Discovery Asset Management, founded by CEO Jang. Some funds suffered investor losses as redemptions were delayed due to the court receivership of a local U.S. asset management company. The outstanding unpaid balance was reported to be 256.2 billion KRW as of the end of April last year.

Earlier, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency had applied for a pre-arrest warrant for CEO Jang on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act, but the prosecution rejected the warrant, requesting supplementary investigation.

The police reinforced the evidence to prove the charges and reapplied for the warrant, and on the 2nd, the Seoul Southern District Prosecutors' Office requested a pre-arrest warrant for CEO Jang.

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