Victims of the 'Dongyang Group Incident' Lose First Trial in Class Action Lawsuit

[Asia Economy Reporter Kim Daehyun] The victims of the 2013 Dongyang Group incident lost the first trial of the class action lawsuit. It has been about eight years since the lawsuit was filed.

On the morning of the 19th, the Civil Division 31 of the Seoul Central District Court (Presiding Judge Kim Jisuk) announced in the first trial of the securities-related class action lawsuit worth about 113.5 billion won filed by 1,254 people including Mr. Seo, who invested in corporate bonds of Dongyang affiliates, against Dongyang Securities (now Yuanta Securities), "All claims of the plaintiffs are dismissed. The plaintiffs shall bear the litigation costs."

Seoul Central District Court. / Photo by Mun Ho-nam munonam@

Earlier, Mr. Seo and others, victims of Dongyang corporate bond investments, applied to the court for permission to file a class action lawsuit, claiming that Dongyang Securities recommended investing in corporate bonds with a high risk of default.

The Dongyang Group incident was a case in which Dongyang Group, which was experiencing a liquidity crisis, issued commercial papers (CP) and corporate bonds of insolvent affiliates in 2013, causing damage to 40,000 investors. The total damage amount at that time reached 1.3 trillion won.

Regarding this incident, former Dongyang Group Chairman Hyun Jae-hyun was sentenced to seven years in prison by the Supreme Court in 2015 for fraud and other charges under the Act on the Aggravated Punishment of Specific Economic Crimes, and was released in 2021 after serving his term.

The securities-related class action lawsuit is a system to remedy collective damages arising from securities transactions. If the plaintiffs win, the court recognizes their representativeness and remedies the rights of related victims who did not participate in the lawsuit. Unlike ordinary lawsuits, permission to initiate the lawsuit must be granted after court review.

In 2016, the Seoul Central District Court ruled that the requirements for a class action lawsuit were not met and denied permission. The victims appealed to the Seoul High Court with the same content, but it was not accepted again. After repeated appeals, the victims obtained a court ruling through the Supreme Court in 2018 that the class action lawsuit should be permitted.

Meanwhile, Dongyang Securities’ largest shareholder changed to Taiwan’s Yuanta Securities in 2014, after the Dongyang Group incident. In October of the same year, the company name was also changed to Yuanta Securities.

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