Lawyers of investors who were deceived into buying fraudulent debt products claimed Monday that the government should compensate for the losses of their clients.
The lawyers who represented more than 360 small investors said at the first hearing at the Seoul Central District Court that the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) should pay them 1 million won (US$920) each in compensation. The FSC and FSS, however, denied any wrongdoing.
The lawyers said the two government agencies failed to take action despite their knowledge of the dubious nature of debt products sold by Tongyang Securities Inc.
Last year, the head of Tongyang Group -- South Korea's 38th-largest conglomerate -- was found guilty of ordering the group's affiliates to issue 1.3 trillion won worth of bonds and commercial papers between February and September 2013. The sales were made even though he knew the companies wouldn't be able pay off their debts, the court ruled.
More than 40,000 investors bought the fraudulent debt products, though only 362 joined the legal battle. It was not clear whether others will take any similar legal action.
The next hearing is set for June 8. (Yonhap)
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