Prosecutors Launch Full-Scale Reinvestigation into the 'Lime Scandal'

Prosecutors have launched a reinvestigation into the Lime scandal. They plan to start by investigating allegations that Lime Asset Management provided preferential redemptions to certain influential figures.

According to legal circles on the 25th, the Joint Investigation Unit for Financial and Securities Crimes at the Seoul Southern District Prosecutors' Office (led by Chief Prosecutor Dan Seonghan) presented a search warrant to the Financial Supervisory Service (FSS) the previous day and secured inspection records related to the redemption of Lime Asset Management's funds. This is the first time a search warrant has been executed to investigate allegations of preferential redemptions.

Since May, prosecutors have been reviewing the inspection results of Lime and other asset management companies received from the FSS to determine whether criminal charges are warranted and if compulsory investigation is necessary. The investigation team summoned a former Lime Asset Management employee as a witness to investigate the fund management and the circumstances surrounding the suspension of redemptions.

Based on the records obtained, prosecutors plan to verify whether Lime Asset Management provided preferential redemptions to certain influential individuals and whether any illegal activities occurred during this process.

The FSS announced the previous day that its reinspection of Lime Asset Management uncovered preferential redemptions for specific fund beneficiaries and embezzlement allegations involving approximately 200 billion KRW from invested companies.

The Lime fund faced allegations in 2019 of manipulating returns through illicit transactions involving convertible bonds (CBs), which led to a sharp decline in the stock prices held by the fund and ultimately resulted in a suspension of redemptions. As of July last year, financial authorities identified 4,473 victims with total damages amounting to 1.538 trillion KRW.

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