As the Financial Supervisory Service notified executives of Lime Asset Management (Lime) fund sales companies of severe disciplinary action, the possibility of further prosecution by corporations increased.
It is noteworthy that if a corporation’s criminal responsibility is recognized, it can affect civil lawsuits conducted by victims against vendors.
According to financial institutions on the 7th, the Financial Supervisory Service sent a notice of preliminary sanctions related to the test results to Woori Bank, a Lime fund seller, on the 3rd, and informed Woori Finance Chairman Son Tae-seung, who was the head of Woori Bank at the time of the Lyme crisis, of the’recession of job suspension’. Job suspension is the second highest among the five levels of sanctions for executives of financial companies, following the recommendation for dismissal.
Earlier, the Financial Supervisory Service issued the same disposition to former KB Securities CEO Yoon Gyeong-eun, Kim Hyung-jin, former Shinhan Financial Investment CEO, and Na Jae-cheol, former Daishin Securities CEO, during a Lime-related sanctions trial last year. The main reason for sanctions is that vendors have not properly established internal control standards and neglected management.
After the announcement of sanctions by the FSS, the prosecution charged Shinhan Geumtu and Daeshin Securities to be responsible for the’negligence of employee management supervision’ and indicted the two corporations with punishment regulations for fraudulent fraudulent transactions and unfair solicitation. This is the first case in which a sales company has been handed over to criminal trial in connection with fraudulent fraudulent transactions and incomplete sales of private equity funds.
KB Securities and Woori Bank’s lime-related suspicions that have not yet been prosecuted are being investigated. Last year, the prosecution confiscated KB Securities and Woori Bank to obtain data on Lime Fund sales and management. Chairman Son was also confiscated and searched in connection with the allegations of illegal solicitation by former Daegu High Prosecutor’s Office Yoon Gap-geun.
In the meantime, there are observations that it will be difficult for Lime Fund managers at Woori Bank and KB Securities to avoid criminal responsibility.
Woori Bank’s Lime Fund sales accounted for the largest sales of 357.7 billion won, and KB Securities provided a Total Revenue Swap (TRS) loan to Lime. Employees of these vendors are suspected of continuing to sell the Lime Fund, hiding it even though they knew about the insolvency.
In the legal world, there are many views that the prosecution will prosecute the Lime Fund managers of each bank, and the corporation will also be handed over to trial in accordance with the punishment rules.
Corporations prosecuted under the punishment regulations are fined even if they are found guilty, and the punishment is not significant. However, if criminal responsibility is admitted, it may affect dispute settlement or lawsuits for claiming damages, which determine the victims’ loss compensation ratio.
Attorney Kim Jeong-cheol, who represents Lime victims, said, “The conviction of the accused corporations has a declarative meaning that the corporation is responsible for the fraudulent and incomplete sales of employees.” It will be the basis for that.”
In the case of Woori Bank, suspicions have been raised that the fact that the fund was insolvent was reported to Chairman Son. Some say that if Chairman Sohn has tolerated the sale of the fund even after receiving such a report, it can be seen as a’fraud aid’ beyond neglect of management and supervision.
Deuk-eui Kim, the CEO of the Financial Justice Association, said, “If you continue to sell with the intent to deceive customers even if you know the fund is insolvent, it can be regarded as a fraudulent accomplice or helper.” Individuals can also be subject to criminal penalties.”
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