"Information Exchange Not Allowed Under Relevant Laws"
Preparing for Full Civil and Criminal Response
[Asia Economy Reporter Kim Hyo-jin] As dispute resolution applications against 'Lime Fund' sellers such as commercial banks continue and the Financial Supervisory Service's possibility of conducting incomplete sales inspections increases, the sellers are arguing that "it was difficult to detect the operational risks of Lime Asset Management's funds in advance according to relevant regulations." Their logic is that since they were completely unaware of the fraudulent design and management practices that were so disorderly as to warrant fraud charges, they themselves are victims in this incident.
According to the financial sector on the 15th, a joint response team consisting of 16 banks and securities firms that sold Lime Funds, including Woori, Shinhan, KEB Hana Bank, Shin Young, and Samsung Securities, is preparing a full-scale response against Lime Asset Management based on this position.
A joint response team official said, "Once the due diligence results from Samil Accounting Corporation are released, we plan to strongly request the reestablishment of the fund's redemption schedule first," adding, "Afterwards, we intend to initiate civil and criminal actions for damages caused by Lime Asset Management's operational negligence and illegal acts."
The regulation pointed out by the joint response team is Article 45 of the Capital Markets Act and its subordinate statutes. It states that "an asset management company shall not provide the sales company with information about the fund's composition and operation that is likely to cause conflicts of interest with the sales company, before such information is disclosed to the unspecified majority."
A representative of a commercial bank participating in the joint response team explained, "In conclusion, the sellers could not be involved in fund management at all, and the possibility of information exchange was also blocked." Investigations so far have confirmed that, in the case of trade finance, only a very small number of key personnel such as internal staff at Lime Asset Management were aware of the details.
Another commercial bank official lamented, "It is nearly impossible for sellers to grasp information that even Lime Asset Management's internal executives did not properly know and to detect insolvency or illegality based on that." The common voice among sellers is whether it is imaginable for them, who operate based on long-term trust relationships with investors, to deliberately conceal insolvency and participate in illegal activities.
The joint response team held a public hearing in October last year to proactively request Lime Asset Management's liquidity securing plan and repayment plan. The fund due diligence currently being conducted by Samil Accounting Corporation also started at the joint response team's request. The joint response team plans to focus all future activities on investor protection.
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