FSS: "Preferential Repurchase Confirmed... Director Lee Bok-hyun Has Never Apologized to Assemblywoman Kim Sang-hee"

Financial Supervisory Service, Supplementary Explanation on Inspection TF Results of Asset Managers Causing Major Investor Losses
"Even if losses occurred, preferential treatment if redemptions were accepted just before a large-scale redemption crisis"
Kim Sang-hee at Clarification Press Conference: "Lee Bok-hyun Apologizes"... Financial Supervisory Service Completely Denies

The Financial Supervisory Service (FSS) denied claims that Governor Lee Bok-hyun apologized to Democratic Party lawmaker Kim Sang-hee, who is suspected of receiving preferential redemptions just before the large-scale suspension of redemptions in the 'Lime Fund' case. The FSS reiterated its position that even if investors suffered losses from investing in the Lime Fund, receiving redemptions just before the large-scale suspension constitutes preferential treatment. This was a rebuttal to Kim's denial of preferential treatment, claiming she "suffered losses worth tens of millions of won."

[Image source=Yonhap News]

On the 25th, the FSS stated, "Governor Lee visited Representative Kim's office this morning at the request of Baek Hye-ryun, Chair of the Political Affairs Committee, and Representative Kim to hear their position regarding media reports related to yesterday's briefing. However, there was no apology or expression of regret from Governor Lee."

The FSS announced that just before the large-scale suspension of redemptions in August-September 2019, when four Lime funds faced asset deterioration and liquidity shortages leading to insufficient funds for redemptions, some investors received preferential redemptions using 12.5 billion won from other fund assets and 450 million won from the asset management company's proprietary funds. Among those who withdrew money early were influential figures such as A Central Association (20 billion won), B listed company (5 billion won), and a multi-term lawmaker (200 million won). It was pointed out that by using a Ponzi-like scheme, influential figures including lawmakers recovered their money early, effectively shifting losses onto other fund investors. Subsequent media reports identified the multi-term lawmaker as Representative Kim Sang-hee (four terms).

On the same day, Representative Kim held a press conference at the National Assembly Communication Office, strongly denying the allegations by stating, "I actually suffered losses worth tens of millions of won." According to her, she invested about 200 million won and received 156 million won at the time of redemption. She emphasized, "I invested following the proposal of Mirae Asset Securities, the fund operator (fund distributor), and at the end of August 2019, Mirae Asset recommended redemption. Including myself, a total of 16 investors who invested in Lime Martini No. 4 Fund through Mirae Asset accepted the recommendation and redeemed simultaneously." Representative Kim said that Mirae Asset Securities would submit this fact in writing to the FSS on the same day.

In particular, Representative Kim claimed that she met Governor Lee at the National Assembly in the morning to protest, during which Governor Lee apologized about five times, saying "I am sorry." She pointed out, "Governor Lee promised to confirm that there is no evidence that Representative Kim was involved in the preferential redemption process or intentionally engaged, and to express regret over the media reports specifically naming Representative Kim, but no action has been taken."

However, the FSS officially denied such claims through a press notice. This stance was completely opposite to Representative Kim's claim that she received an apology. Later, around 7 p.m., the FSS issued supplementary explanatory materials from the task force (TF) investigating major investor damages and asset management companies announced the previous day, stating, "It is necessary to recall that the Lime Fund incident was a serious case causing social unrest by triggering a large-scale suspension of redemptions amounting to about 1.7 trillion won due to illegal and poor management, causing losses to numerous investors."

The FSS explained, "The Ponzi scheme additionally uncovered by this TF involved four open-ended Lime funds redeemed in September 2019, just before the large-scale suspension of redemptions. Among about 60 open-ended Lime funds, only these four funds redeemed by borrowing money from other funds or using proprietary funds. These four funds held distressed or illiquid assets, making normal redemption impossible in the face of sudden large redemption requests (due to liquidity shortages, suspension of redemptions was inevitable without other fund support). However, Lime illegally supported funds to reduce investor losses and allow some to avoid losses, which is a clear fact."

The FSS stated, "Regardless of whether investors suffered losses, this was judged as preferential redemption, and compared to other investors who suffered long-term pain due to large losses from the suspension of redemptions, investors in these four funds benefited." Regarding suspicions of fund embezzlement at investee companies, the FSS said it plans to actively cooperate with investigations to clearly clarify the flow and use of funds (including illegal lobbying funds and inflows into political circles).

Meanwhile, to prove that Representative Kim received preferential treatment, she would have had to receive advance notice from Lime Asset Management such as "redemptions will likely be suspended, so withdraw your money early," but the FSS did not comment on this matter. Industry insiders expect that why Lime used proprietary funds and other fund assets to respond to some distributors' redemptions will be a key issue determining the direction of preferential treatment allegations.

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