[단독] Public institutions invested in Optimus thanks to Supreme Court precedent

Input 2021.04.07 11:12 | Revision 2021.04.07 11:17

The Korea Rural Community Corporation, the Korea Horse Association, and the Korea Electric Power Corporation, who invested in the Optimus Fund as an in-house welfare fund, received unintended luck thanks to the Supreme Court precedent announced four days before the Financial Dispute Mediation Committee of the Financial Supervisory Service.

Initially, the Financial Supervisory Service and NH Investment & Securities classified Korea Rural Community Corporation, Korea Horse Association, and Korea Electric Power Corporation as professional investors. However, four days before the subcommittee was opened, a precedent that interpreted the internal welfare fund of public institutions as a general investor came out, and these three institutions changed their status to general investors.

General investors are more likely to make up for losses than professional investors. The Financial Supervisory Service subcommittee advised NH Investment & Securities to return the full amount of the investment to ordinary investors who do not have financial knowledge. On the other hand, professional investors judged that they were responsible for the investment to some extent, so they saw that a court lawsuit was necessary.

According to the Financial Supervisory Service on the 7th, three public institutions, including Korea Rural Community Corporation, Korea Horse Association, and Korea Electric Power Corporation, were classified as ordinary investors in the Optimus Fund dispute settlement plan. Under the Capital Markets Act, ordinary investors refer to groups that are protected by investors because they lack the responsibility of professional investors.

The previous day, the Financial Supervisory Service subcommittee advised NH Investment & Securities to apply “cancellation of contract due to error (error cancellation)” only to general investors. If cancellation of error is applied, NH Investment & Securities must return all the principal to the investor.

However, the Financial Supervisory Service recommended that professional investors be covered in court litigation. This is because there is room for interpretation as investor responsibility in that a professional investor with financial expertise has not been able to properly grasp the existence of public institution defined accounts receivables.

According to the Supreme Court’s precedent, the cancellation of error is not established because the investor’s serious negligence occurred when the attention required in light of the investor’s profession, type of action, purpose, etc. was significantly lacked.

Initially, these three institutions also invested in Optimus through the in-house welfare fund, so they were classified as professional investors who had to go through court lawsuits. According to Article 10, Paragraph 3 of the Enforcement Decree of the Capital Market Act, funds established in accordance with the Act and corporations that manage and operate funds are classified as professional investors.

The situation was reversed on the 1st, four days before the opening of the committee, when the Supreme Court precedent that viewed the internal welfare fund of public institutions as a general investor came out. The Supreme Court declared that the in-house labor welfare fund is a general investor, not a professional investor, and therefore has an obligation to protect investors.

The Supreme Court said, “The scope of professional investors should be interpreted in a limited manner, except when explicitly recognized in accordance with the Capital Markets Act and its enforcement decree.” It is difficult to say that it corresponds to the’fund established according to the law’.”

Accordingly, the Financial Supervisory Service reclassified a total of 7 companies from the list of investors received from NH Investment & Securities, including the Korea Rural Community Corporation, the Korea Horse Association, and the Korea Electric Power Corporation’s three internal labor welfare funds and four corporate internal welfare funds. They were initially classified as professional investors by NH Investment & Securities and submitted to the Financial Supervisory Service. NH Investment & Securities also agreed to reclassify these institutions as ordinary investors in accordance with the Supreme Court precedent.

According to the FSS’ indulgence, the possibility of returning the full amount of the investment capital to these three institutions is also increased. Currently, these institutions are in the process of proceeding with a civil lawsuit to apply the cancellation of errors to NH Investment & Securities. In order for an investor to be included in the FSS’ dispute settlement, he must not proceed with a lawsuit. Earlier, these institutions are known to have set a policy of dropping the lawsuit if NH Investment & Securities accepts the dispute settlement proposal.

Apart from the current situation, doubts were raised whether these institutions were paying sufficient attention because they were not able to determine the existence of established accounts receivable by public institutions even though they were public institutions.

NH Investment Securities obtained last year by Congressman Ahn Byung-Gil’s Office of the People’s Power and Korea Rural Community Corporation’s currency transcripts contained the rudimentary decision to invest 2 billion won even when the Rural Community Corporation raised questions about the concept of accounts receivable from public institutions. In the national audit, the Korea Rural Community Corporation was accused of making an investment decision on the phone after hearing the related information over the phone, even though the product proposal did not explain the profitability and risk.

Reporter Cheol-woong Kim, Deputy Director of Consumer Rights Protection of the Financial Supervisory Service, explained the decision of the subcommittee, saying, “Some of the investors in the Optimus Fund were construction companies.” It was judged that it did not check whether or not,” he said, saying that public institutions are also responsible for investment.

When asked whether it is possible to return the full amount of ordinary investors who lack the duty of care, Vice-Director Kim said in a phone call with Chosun Biz. “If ordinary investors are also liable to gross negligence, they may not be subject to the cancellation of errors in the process of self-regulation.” Even if NH Investment & Securities accepts the mediation proposal, if it raises a problem against some of the general investors, the agenda is referred to the Financial Supervisory Service again, and if the mediation breaks down, it leads to a lawsuit.”

Meanwhile, the Korea Rural Community Corporation invested 3 billion won, the Korea Horse Association 3 billion won, and the Korea Electric Power Corporation 1 billion won in the Optimus Fund through the in-house labor welfare fund.