Supreme Court: Woori Bank's Sale of Lime Fund Not "Intentional Fraud"... Contract Cancellation Ruling Overturned and Remanded

Investor Suffers Loss After Investing 560 Million Won Amid Redemption Suspension
Fraud and Mistake at the Center of Lawsuit
Appellate Court: "Cancel the Contract and Return the Investment"
Supreme Court: "Difficult to Recognize Intentional Fraud"

The Supreme Court has ruled that it is not possible to cancel the contract itself on the grounds that Woori Bank, which sold the 'Lime Fund' at the center of a massive redemption halt crisis, intentionally deceived investors.

Supreme Court, Seocho-gu, Seoul. Photo by Yonhap News

According to the legal community on May 17, the Supreme Court (Presiding Justice Lee Heung-gu) recently overturned a lower court ruling that had recognized Woori Bank's fraudulent actions and ordered the bank to compensate investor A for damages in a lawsuit filed against both the bank and employee B. The Supreme Court has remanded the case for reconsideration.

Previously, Woori Bank had entered into a consignment sales agreement with Lime Asset Management and sold the fund in question. Investor A, following the recommendation of employee B, invested 560 million won in the fund. However, after the redemption suspension crisis erupted in October 2019, A was only able to recover part of the funds.

As a result, A filed a lawsuit, seeking primarily to cancel the fund subscription contract and reclaim the principal on the grounds of fraud or mistake (claiming unjust enrichment), and secondarily, compensation for damages due to violation of investor protection obligations under the Capital Markets Act.

The court of first instance dismissed the primary claim (contract cancellation) and only upheld the secondary claim (damages). In contrast, the appellate court accepted A's primary claim, recognizing either fraudulent actions by the bank or cancellation due to mistake resulting from failure to disclose important matters, and ruled that the bank was obliged to return unjust enrichment.

However, the Supreme Court overturned the appellate court's decision. The bench stated, "It is true that at the time of employee B's recommendation, 60 percent of the fund had a higher risk rating than previous investment products, yet was described as similar. However, this may only be seen as an insufficient explanation, and it is difficult to conclude that the bank intentionally engaged in fraudulent conduct."

Furthermore, the Supreme Court found that there was "no existing benefit" to warrant the return of unjust enrichment in relation to cancellation based on mistake, and therefore overturned the lower court's decision. As a result, the Supreme Court also remanded the secondary claim (damages), which was alternatively combined with the primary claim, for further review.

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