Financial Supervisory Service, Disclosures on Private Equity Disputes and Sanctions
Damage recovery in unprecedented ways such as contract cancellation and post settlement
However, the liquidity payment without the’misrecognition’ of the seller is also significant.
Members of the Woori-Shinhan Bank Lime Fund Victims Solidarity are holding a press conference on the afternoon of the 25th of last month in front of the Financial Supervisory Service in Yeouido, Seoul, urging the dismissal of the manager of the Lime Fund of Woori-Shinhan Bank. yunhap news
Of the halted repurchase of the Lime Asset Management Fund amounting to 1.4 trillion won, 1.1 trillion won has been passed to the victims so far. This is the result of the Financial Supervisory Service’s strong remedy for damage in an unprecedented manner, such as contract cancellation and post settlement. In the first half of this year, the Financial Supervisory Service plans to complete dispute settlement over other private equity issues.
77% of the amount of lime redemption stopped
According to the Financial Supervisory Service on the 21st, the dispute settlement process for KRW 1.1 trillion was completed out of the amount of KRW 1.41 trillion to suspend the redemption of the Lime Fund. It has been 13 months since the Financial Supervisory Service announced that the repurchase of KRW 1.667 trillion was suspended as a result of an interim inspection in February of last year. After the announcement, the size of the redemption deferral fund was reduced by about 250 billion won as some redemption was possible.
The reason for the increase in the Lime Fund recovery rate, which was predicted to be as low as 50%, was largely influenced by unprecedented measures such as cancellation of the contract and the introduction of compensation for damages through post settlement during the dispute settlement process. Investors are concerned about prolonged damages, such as the fund can be compensated only after the damage is confirmed, and the Lime Fund will not be confirmed until 2025 at the latest.
Accordingly, the Financial Supervisory Service Dispute Mediation Committee (the subcommittee) made a decision to cancel the contract itself in accordance with the law in June last year, when it discovered illegal matters in the process of selling the Lime Trade Finance Fund. It was the first case of dispute settlement on financial investment products.
As a result of this decision, 500 individual investors and 58 corporations received a total return of KRW 161.1 billion in investment capital. In addition, for funds with unconfirmed losses, compensation of KRW 354.8 billion was completed with the consent of the seller and the victim.
“After completion of the 5 major funds, other funds are also launched quickly”
However, dispute settlement has not yet been completed. This is because the majority of the scale of privateization (600 billion won) of sellers who did not go through the Financial Supervisory Commission’s sub-committee were merely liquidity payments by sellers in the form of’interest-free loans’ to investment victims. Kim Deuk-eui, CEO of the Financial Justice Solidarity, stressed, “Since the liquidity payment is not an error from the seller, the Financial Supervisory Service should initiate the dispute settlement procedure for the seller who does not agree with the post-acquisition method.”
Besides rhyme, there are also many tasks to be solved. According to the Financial Supervisory Service, as of the end of December last year, the size of the redemption deferral fund amounted to 6,847.9 billion won. Among them, 42% of the five major funds, such as Heritage, Optimus, Discovery, and Healthcare, which had many individual investors besides Lime, accounted for 42%.
An official from the Financial Supervisory Service said, “We will close the five major funds in the first half of the year, and promptly initiate dispute settlement procedures for the rest of the other funds.”
The sanctions process is still slow. In December of last year, the financial authorities decided to “cancel registration,” the highest level of sanctions for financial companies, against Lime in December of last year. Selling securities companies (Shinhan Geumtu, KB Securities, and Daeshin Securities) are currently undergoing deliberation by the Financial Services Commission, and selling banks (Woori and Shinhan) are undergoing the stage of the FSS Sanctions Deliberation Committee.
Jeonghyun Kim reporter [email protected]
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