'Hana Bank Employees as Trustees of "Optimus Fund" Acquitted in First Trial'

Representatives of the Optimus Fund Victims' Association are urging the cancellation of Optimus contracts (full principal refund) in front of the Financial Supervisory Service in Yeouido, Yeongdeungpo-gu, Seoul on April 5 last year. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Daehyun] Hana Bank employees who were prosecuted for participating in the cover-up of redemption payments for the Optimus Asset Management (Optimus) fund, which caused a large-scale fund redemption suspension incident, were acquitted in the first trial. Following NH Investment & Securities, the fund distributor, Hana Bank, the custodian, also avoided criminal punishment.

On the afternoon of the 22nd, the Criminal Division 23 of the Seoul Central District Court (Presiding Judge Jo Byeonggu) acquitted Hana Bank Custody Sales Department employees Jo (52) and Jang (51), who were indicted without detention on charges of violating the Capital Markets Act and breach of trust. The Hana Bank corporation, which was jointly indicted under the principle of vicarious liability, was also acquitted.

The court stated, "The prosecution pointed out that due to the operation of a fund management system that integrally manages inter-fund loans by collective investment business operators, 'inter-fund loan adjustments' corresponding to transactions between funds were easily made. However, the fact that Hana Bank operated an integrated fund management system itself cannot be regarded as a violation of the segregation management obligation under the Capital Markets Act."

It further explained, "Even if the bank internally adjusted the amount of inter-fund loans to close the accounts, it did not affect the substantive rights and obligations, so it is difficult to consider this as a 'transaction' between funds."

The court acknowledged that "the defendants managed private bonds, which are non-depositary bonds, as investment target assets, and although repeated deposit delays occurred, the handling of the work seemed somewhat difficult to understand," but added, "there was no proof beyond reasonable doubt that the fund investors gained profits and other fund investors suffered losses as a result."

Moreover, the court judged that it was difficult to conclude that Jo and others had intent regarding the related crimes. Regarding Jo’s charge of aiding and abetting fraud, the court said, "There is suspicion of at least indirect intent, but even after reviewing the evidence, it cannot be said that it was proven beyond reasonable doubt that Jo knowingly assisted the fraudulent acts of Optimus CEO Kim Jaehyun." CEO Kim and the Optimus corporation, who were also indicted, were acquitted on the same day.

Previously, the prosecution judged that from August to December 2018, the defendants participated three times in covering up redemption payments of 9.2 billion KRW for the Optimus fund by using funds from other entrusted funds, thereby causing financial benefits to the fund beneficiaries and losses to other fund investors, and indicted them in May last year. When the redemption payments for the Optimus fund did not arrive on time, funds from other funds were withdrawn to pay profits to Optimus fund investors.

CEO Kim and others were charged with paying approximately 2.4 billion KRW in redemption payments for the Optimus fund, which should have been paid by private bond issuers, using funds from related parties or the corporation twice between August and December 2018.

Meanwhile, employees of NH Investment & Securities, the distributor of the Optimus fund, were also acquitted in the first trial on the 14th, on the grounds that they did not conspire with CEO Kim. They were prosecuted for deceiving investors by falsely guaranteeing the principal of the Optimus fund and subsequently compensating for losses. The prosecution has appealed the acquittal of NH Investment & Securities.

The Optimus incident surfaced in June 2020 when redemptions of the private fund managed by Optimus were successively suspended. According to the prosecution’s investigation, contrary to the investment proposal stating that the fund would be operated by discount purchasing stable assets such as public institution-issued accounts receivable, Optimus purchased private bonds of special purpose companies (SPCs) under their control.

It was revealed that the illegally raised investment funds were used for so-called 'fund cover-ups,' paying redemption payments to earlier investors by forging accounts receivable documents, or illegally used for real estate development investments and acquisitions of listed companies.

The total amount raised from investors in this manner reached 1.5952 trillion KRW, of which about 510 billion KRW was not repaid, causing investor losses. Considering that the confirmed number of victims in the prosecution’s investigation reached 3,200, including corporate and organizational investors, the actual damage is estimated to be even greater.

Regarding related charges, CEO Kim was sentenced to 40 years in prison by the Supreme Court in July. Co-defendant and Optimus’s second-largest shareholder Lee Dongyeol (47) was sentenced to 20 years in prison and fined 500 million KRW, and director Yoon Seokho (45) was sentenced to 15 years in prison and fined 300 million KRW.

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