'Discovery Fund Redemption Suspension' Police Investigation Intensifies... Hana Bank Raided Followed by Jang Ha-won Travel Ban

by Lee Gwanju

Published 23 Jul.2021 13:12(KST)

Only 256.2 Billion Won of the Outstanding Balance Remains Unpaid

'Discovery Fund Redemption Suspension' Police Investigation Intensifies... Hana Bank Raided Followed by Jang Ha-won Travel Ban

[Asia Economy Reporter Lee Gwan-joo] The police investigating the suspension of redemptions of the Discovery Asset Management (Discovery) private equity fund have accelerated their investigation by conducting a search and seizure at Hana Bank, the fund’s sales agency, and imposing a travel ban on Discovery CEO Jang Ha-won (62).

According to the police on the 23rd, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency conducted a search and seizure at Hana Bank’s headquarters yesterday morning and imposed a travel ban on CEO Jang.

Hana Bank was one of the sales agencies for Discovery fund products from 2017 to 2019. The Discovery fund’s redemptions were suspended due to issues such as the court receivership of a local U.S. asset management company.

The known damage amount has reached several hundred billion won. According to the Financial Supervisory Service, as of the end of April this year, the outstanding balance that banks and others have been unable to repay due to the suspension of redemptions was estimated at approximately 256.2 billion won.

The police are reported to have secured related materials such as product brochures for customers through this search and seizure. They are also considering applying charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act against CEO Jang.

CEO Jang is the younger brother of Jang Ha-sung, the ambassador to China who previously served as the Blue House Chief of Policy. He served as the head of Hana Financial Research Institute from 2005 to 2008 and established Discovery in 2016. As it is known that several commercial banks are included among the fund’s sales agencies, there is a high possibility that the police investigation will expand in the future.

The police are said to have been conducting a preliminary investigation into this case for several months. A police official stated, "We are currently investigating the suspension of redemptions," adding, "Whether the bank engaged in poor sales practices or what charges to apply are all subjects of the investigation."