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Lime Asset Management |
South Korea’s market watchdog Financial Supervisory Service is slated to order local banks that sold the problematic funds structured by Lime Asset Management to compensate investors who were victims in the massive fraud, officials said Monday.
Lime Asset has been under an FSS probe since July 2019 for having concealed huge losses and inflated investment returns to keep its customer base. It suspended fund redemption worth an estimated 1.6 trillion won ($1.4 billion).
The dispute arbitration committee of the FSS will reportedly hold its meeting as early as the end of next month to confirm the reimbursement rate for investors, who signed up for Lime funds through domestic banks, including Woori Bank, Busan Bank and the state-run Industrial Bank of Korea.
The move came after the authority conducted an on-the-spot inspection of Woori Bank, known to have sold 357.7 billion won worth of the troubled funds, to review the lender’s liability for the fund scandal. Busan Bank is currently under the same inspection, while the process for IBK is scheduled for either this week or early next month.
In general, the FSS’ financial dispute arbitration takes place after the exact amount of losses incurred from the troubled funds has been calculated.
As it is expected to take around five years to conclude the total damages involving the Lime fund products, the financial watchdog has decided to embark on the reimbursement process.
The fund sellers agreed with the FSS to make restitution based on an estimated amount of damage for the sake of victims suffering from financial damage, officials explained.
In December, the committee ruled that KB Securities -- one of the sellers of the controversial Lime fund products -- should compensate retail investors for up to 70 percent of their losses, saying the brokerage had missold the products without fully notifying customers about investment risks.
By Choi Jae-hee (
cjh@heraldcorp.com)
