[Newsmaker] Woori Bank pulls back Osstem funds amid theft probe

Woori Bank, one of five major local banks, said Friday it had stopped selling funds involving Osstem Implant, whose shares were suspended from trading on the Kosdaq after an employee was arrested for having allegedly stolen funds equal to 91 percent of the company’s equity as of last year.

“It’s a precautionary measure to protect our investors and we do not know at this point when we will begin selling the funds again,” a Woori Bank official said, adding five funds where the implant maker accounts for at least 1 percent of the total were taken off the market.

Earlier, banking rivals Hana Bank and NongHyup Bank stopped signing new customers into their funds linked to Osstem, with brokerages following the suit.

Meanwhile, small investors are seeking legal action for damages caused by the theft that amounted to 188 billion won ($156 million).

“There is damage from the misleading quarterly results the firm had posted and from suspended trading. Those will be our grounds,” said Kim Joo-young, one of the two managing partners at Seoul-based law firm Hannuri seeking to represent investors affected by the embezzlement.

The implant maker faced the risk of delisting in 2014, when its largest shareholder, who was also the chairman essentially steering the firm, stood trial on embezzlement charges. The chairman still oversees the company with a separate CEO running day-to-day business.

The two have reportedly said they could recover most of the stolen money, though the Korea Exchange has yet to back the claim. The bourse operator will decide by late January whether the implant maker could carry on trading.

By Choi Si-young (siyoungchoi@heraldcorp.com)