Daishin Securities Involved in Controversy Over Incomplete Sales

Daishin Securities Sold the Most Lime Funds

Victims Consistently Play the Victim After the Incident

[Asia Economy Reporter Ko Hyung-kwang] Daishin Securities, which sold the most Lime Asset Management funds that have suspended redemptions, is embroiled in a controversy over incomplete sales. Although testimonies from investors who subscribed to the funds are gradually revealing signs of incomplete sales, Daishin Securities has yet to release an official statement. Customers have initiated legal proceedings against Daishin Securities.

According to the financial investment industry on the 28th, as of the end of July last year when the Lime incident broke out, Daishin Securities sold 1.176 trillion KRW, accounting for 21% of the total Lime fund sales balance of 5.7 trillion KRW. This is the largest amount among financial companies that sold Lime funds. About 1 trillion KRW of this was sold at a single branch, Banpo Branch.

It is very unusual for one branch to sell such a large scale of a specific asset management company's fund. This suggests that they actively encouraged customers to purchase. One investor who said they were actively recommended to invest in Lime funds stated, "The reason why the No.1 private fund Lime was sold only at the Banpo Branch among Daishin Securities branches is because of an agreement with the asset management company," adding, "It was like a special privilege." This investor also said that if customers at other branches wanted to subscribe to Lime funds, they were transferred to the Banpo Branch to open accounts and subscribe.

Another investor explained, "The possible risks (in the fund) were set close to 0%, and it was a safe product backed by real estate collateral financing within an LTV of 50%," which led them to subscribe to the fund.

Investors also raised suspicions about Daishin Securities taking the lead in blocking redemptions. When allegations surfaced in July last year that Lime Asset Management engaged in 'rolling over' to manage private fund returns, Daishin Securities immediately gathered investors the following month and held several seminars to reassure them and prevent redemptions. However, shortly after, Lime Asset Management announced a large-scale suspension of redemptions, and investors who trusted Daishin Securities' explanations and did not redeem their funds had their money locked up.

Another investor expressed dissatisfaction, saying, "They even held seminars to block redemptions with false information, but after the incident broke out, they have been indifferent without holding any explanatory meetings." Some investors showed strong reactions, saying, "It is hard not to suspect whether Daishin Securities is a financial company or a fraud group." The fact that the branch manager who recruited many investors at the Banpo Branch moved to another securities company just before the incident also increased investors' distrust.

Some investors have taken legal action against Daishin Securities. They are currently pursuing a lawsuit through a domestic law firm, accusing Daishin Securities of violating the Capital Markets Act and other charges. In response, Daishin Securities has only repeated that "we are also victims who trusted the asset management company and sold the funds," and has yet to release an official position.

Additionally, a Daishin Securities official explained, "Daishin Securities is counted as a financial company that sold over 1 trillion KRW of Lime funds because this includes the volume that Lime Asset Management directly instructed to be set up at Daishin Securities," adding, "The actual amount sold by Daishin Securities is only 69.2 billion KRW."