Shinhan Investment Corp. Decides Full Principal Refund for German Heritage Fund

Private Settlement Method for Customer Protection
Settlement Proposal Does Not Accept 'Legal Disagreement'

[Asia Economy Reporter Lee Jung-yoon] Shinhan Investment Corp. has decided through a board resolution to return the full principal amount to general investors related to the German Heritage Fund, which experienced a large-scale redemption suspension incident. However, it has decided not to accept the dispute mediation committee's (DMC) mediation proposal of contract cancellation due to mistake.

On the 27th, Shinhan Investment Corp. stated, "Over a period of just over a month, we have discussed from multiple perspectives based on the basic principles of customer protection and trust recovery regarding the DMC decision, as well as various legal reviews conducted by multiple law firms," and added, "After careful consideration, due to legal disagreements regarding the DMC mediation proposal of contract cancellation due to mistake, we have decided not to accept the mediation proposal and to choose a private settlement method."

Although 3 years and 6 months have passed since issues such as unpaid interest and other defaults occurred, Shinhan Investment Corp. decided to take high-level customer protection measures through private settlement, considering the urgent need to protect customers who are still facing mental and economic difficulties due to uncertain recovery prospects, and the necessity to respect the purpose of customer protection even if the DMC mediation proposal is not accepted.

General investors who agree to Shinhan Investment Corp.'s private settlement method will be paid the full amount of their investment principal. A private settlement plan will also be proposed to professional investors, who were excluded from the DMC decision, to pay more than 80% of their investment principal. Shinhan Investment Corp. plans to consult with customers through the private settlement plan and pay the corresponding amount as quickly as possible upon completion.

Previously, in April 2020, Shinhan Investment Corp. made an advance payment of 50% of the investment amount to customers whose maturity was extended in order to protect customers whose principal repayment of the German Heritage DLS Trust was delayed.

Earlier, the Financial Supervisory Service held a dispute mediation committee and decided on contract cancellation due to mistake for dispute mediation applications related to the German Heritage Fund sold by six financial companies including Shinhan Investment Corp. The DMC judged that the overseas asset manager prepared the product proposal with false and exaggerated important parts, and the six sellers induced investor mistakes by stating that the German implementer's business history, creditworthiness, and financial status were excellent and that the business was feasible according to the investment structure at the time of contract conclusion based on the proposal.

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