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It is expected that Optimus Fund subscribers who suffered fraudulent damage will receive the full amount of the investment amount worth 510 billion won from the vendor. It is expected that the Financial Supervisory Service will set up a dispute settlement committee early next month to determine 100% compensation for investment losses in private equity funds for the second time after last year’s Lime Trade Finance Fund. In the financial investment industry, there is a backlash that “the Financial Supervisory Service is trying to easily transfer the responsibility for failure to supervise only to the seller”.
A high-ranking FSS official said on the 21st, “The result of a legal review was that the Optimus Fund can compensate in full by applying the law of’cancellation of contract due to error’ in the dispute settlement process.’ He said, “We presented the same opinion.” Optimus Fund presented accounts receivable related to public institution construction as an investment object, but such accounts receivable did not exist in the first place. The official said, “Even though it was a product that did not have an investment target, subscribers did not know this at the time of the fund contract.”
The Financial Supervisory Service is scheduled to close the settlement of disputes between five funds, including Lime, Optimus, Heritage, Discovery, and Healthcare, in the first half of the year. As of the end of last year, the total amount of private equity funds that had been postponed for redemption was estimated at 6,847.9 billion won. Of these, these five funds accounted for 42% (2,884.5 billion won).
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The number of accounts invested in private equity funds postponed redemption was 37,230 for individuals and 24,127 for corporations, reaching a total of 63,357 (as of the end of last year). In total, 1,787 complaints are awaiting processing, including 1370 (77%) filings only in Lime, Optimus, Heritage, Discovery, and Healthcare, which were classified by the Financial Supervisory Service as one of the ‘5 major funds’ that suffered from investors.
Since the Optimus fraud incident in June of last year, the scale of damage to private equity has increased like a snowball. The increase in operating loss due to Corona 19 also played a part. According to the data submitted by the Financial Supervisory Service by Yoon Chang-hyun, a member of the National Assembly’s Political Affairs Committee, the sales of potential insolvent private equity funds, whose redemption was postponed as of the end of last year, amounted to 6,847.9 billion won. Among them, insolvent funds that announced the suspension of redemption amounted to 6,407.5 billion won. Compared to the end of August last year (6,589 billion won), the size of insolvent funds increased by about 350 billion won.
The Financial Supervisory Service announced next month that it would complete dispute settlement in the first half of the first half of the remaining funds following Optimus. Like Lime and Optimus, if a serious reason for illegality is identified during the operation and sales process, the company plans to induce full compensation by canceling the contract as much as possible. Even if the damage was not confirmed, in the event of incomplete sales, the seller first compensated the subscribers and then settled after recovering the investment.
In the financial investment industry, private equity dispute settlement is carried out in a way that puts all responsibility on sellers and management. Unlike Lime Trading Finance Fund, which has been raised with suspicion that Shinhan Investment & Securities, a seller, has been involved in poor fund management, the Optimus Fund has not been proven to involve NH Investment & Securities.
NH Investment & Securities, the largest seller of Optimus Fund (432.9 billion won), is strongly protesting, saying,’We are also victims of Optimus fraud.’ The FSS has held a sanction review committee since February and is discussing the level of disciplinary action against NH Investment & Securities. NH Investment & Securities President Chung Young-chae has been notified of a three-month suspension of work, which is a severe disciplinary action.
President Jeong said, “Optimus did not instruct the management according to the investment proposal, and the trustee (Hana Bank) and the office manager (Securities and Settlements) handled differently. However, after the accident, a seller who was not involved with the product at all. “It doesn’t make sense to take responsibility for everything.”
The FSS is expected to speed up inspections and sanctions on Lime and Optimus, as well as other sellers related to the redemption delay fund. The sanctions review against IBK related to the Discovery Fund (25.6 billion won) ended last month. From the end of April, sanctions deliberations will begin against Hana Bank, a health care (184.9 billion won) fund seller. It is also planning to inspect other vendors that sold the five major funds.
The financial authorities and the gold investment industry have been conducting autonomous checks on 9043 private equity funds since August last year to check whether the fund assets exist or not. As a result of checking about 82% so far, important specifics have not yet been reported. The Financial Supervisory Service said that 20 inspections were completed in field inspections targeting 233 private equity firms, and no large-scale illegal operation cases have been found yet.
Reporter Oh Hyeong-joo [email protected]