Shinhan Investment Corp. and Other Heritage Fund Sellers Request Extension for Full Refund Decision Response

[Asia Economy Reporter Lee Jung-yoon] Securities firms that sold the German Heritage Fund, which experienced a large-scale suspension of redemptions, have delayed their response on whether to accept the financial authorities' proposal for full compensation of investors' principal.

According to the financial investment industry on the 19th, sales financial firms such as Shinhan Investment Corp., NH Investment & Securities, Hana Bank, and Woori Bank have requested an extension of the response deadline from the Financial Supervisory Service (FSS). The original deadline was until this day, but the FSS accepted the request and decided to extend the deadline by one month. However, the extension will be limited to this one time, as it is understood that the matter cannot be prolonged in order to protect investors.

Earlier, the FSS held a Dispute Mediation Committee meeting and decided to cancel the contracts due to error regarding the dispute mediation applications related to the German Heritage Fund sold by six financial firms including Shinhan Investment Corp.

The committee judged that the overseas asset manager prepared the product proposal with false and exaggerated important parts, and the six sales firms induced investor error by stating at the time of contract signing that the German operator’s business history, creditworthiness, and financial status were excellent and that the business was feasible according to the investment structure, based on the proposal.

Since the committee’s mediation decision is only advisory, it becomes effective only if both the complainants and the financial firms agree. Therefore, the fund sales firms have been continuously reviewing the contract cancellation and full refund proposal internally.

Shinhan Investment Corp. held an extraordinary board meeting to discuss the recommendation for full refund of the Heritage Fund but could not reach a conclusion. It is reported that the acceptance of the recommendation will be decided after re-discussion at the regular board meeting held this month. NH Investment & Securities, Hana Bank, and Woori Bank also informed the FSS that they will disclose their acceptance after further discussions. However, other sales firms such as Hyundai Motor Securities and SK Securities have decided to accept the FSS’s recommendation.

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