Legislative Affairs Committee's 'Lime Redemption' Dispute... Lee Bok-hyun: "It's Illegal" Opposition: "Political Damage Intended"

Democratic Party Rep. Kim Sang-hee's 'Preferential Buyback' Controversy
Lee Bok-hyun: "Clear Violation of Capital Markets Act"

On the 4th, the Democratic Party of Korea engaged in a heated debate with Lee Bok-hyun, the Governor of the Financial Supervisory Service (FSS), at the National Assembly's Financial Services Committee over allegations of preferential redemptions related to the 'Lime Fund,' which caused a large-scale suspension of redemptions. It was revealed that some influential figures, including multi-term lawmakers, received their investments back just before the Lime Fund suspended redemptions. Since the lawmaker in question is known to be affiliated with the Democratic Party, the issue has escalated into a political controversy. Governor Lee pointed out that the preferential redemptions of the Lime Fund were clear "illegal acts," while the Democratic Party countered by calling it a "political conspiracy."

[Image source=Yonhap News]

During the afternoon plenary session of the National Assembly's Financial Services Committee, in response to a question from Choi Seung-jae of the People Power Party asking, "Is it preferential treatment if the asset management company returned some money with an additional amount to certain individuals?" Governor Lee replied, "It is an act that violates the Capital Markets Act." He added, "Regardless of the area of judgment, it is true that the beneficiaries received profits stemming from illegal acts," and said, "Since this is related to the order of the capital market, we will proceed properly according to principles."

On the 24th of last month, under Governor Lee's directive, the FSS announced the results of additional inspections on three asset management companies: Lime, Optimus, and Discovery Asset Management. The announcement revealed that some influential figures, including multi-term lawmakers, received their investment funds back just before the suspension of redemptions related to the Lime incident. In response, Kim Sang-hee, a Democratic Party lawmaker mentioned as a party involved, immediately denied any involvement in the redemption process. The next day, Kim held a press conference stating, "The fund I invested in is completely unrelated to the redemption suspension funds that were problematic in the past Lime incident," and refuted, "All claims of preferential redemptions are false and absurd." She also accused the FSS's announcement of being a political conspiracy, explaining that it clearly includes political intentions aimed at tarnishing the Democratic Party.

At the Financial Services Committee that day, Democratic Party lawmakers strongly criticized the FSS for issuing a press release specifying "multi-term lawmakers" in connection with the ongoing investigation into the Lime Fund's preferential redemption allegations.

Kim Han-gyu, a Democratic Party lawmaker, pointed out, "From the press release alone, it appears as if these lawmakers used their significant positions to pressure asset management companies or fund sales companies to illegally redeem assets." He criticized, "The FSS should investigate and announce whether there are factual circumstances where exceptions are allowed under the Capital Markets Act, or whether the preferential treatment was obtained through pressure. This is not a disclosure of a suspect's fact, but if false facts are seen through the press release, it appears as if they are true."

Kang Hoon-sik, another Democratic Party lawmaker, said, "In the past 10 years, the FSS has never specified lawmakers in its press releases," and added, "If they are going to do so, there should be more grounds. Since they said there is more data to confirm whether it was preferential redemption, please submit that data additionally."

Lee Yong-woo, a Democratic Party lawmaker, raised his voice, saying, "Whether it is illegal or not should be clarified through investigation and prosecution. The supervisory agency presented guidelines with prejudice. Why did the Governor of the Financial Supervisory Service announce something under the pretext of investigation, which is within the scope of prosecution, causing defamation and political damage before anything is confirmed?"

Governor Lee responded, "It is true that the final judgment of illegality is within the judiciary's domain, but this case involves funds that cannot be normally redeemed, and even at that time, open-ended funds could not be normally redeemed. In that sense, violation of the Capital Markets Act is clear."

He continued, "This redemption itself is clearly illegal," and emphasized, "I can say it is illegal even without going to investigative agencies. Also, since the direct beneficiaries of the illegal redemption are specific individuals, I thought it necessary to inform the public. On the contrary, excluding specific beneficiaries would be dereliction of duty."

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