Over 300 Dispute Resolution Applications for Lime Mis-selling
Investors Move to Target Sellers with Complaints
FSS Prepared for Investigation but Paused Due to COVID-19
[Asia Economy Reporter Kim Hyo-jin] Dispute resolution applications related to the incomplete sales of Lime Asset Management's private equity funds by banks, securities firms, and other sellers have recently been rapidly increasing. This is interpreted as a result of a large number of applications being submitted based on the judgment that receiving mediation from the Financial Supervisory Service (FSS) is more efficient and advantageous than immediately entering litigation.
The FSS has completed preparations for on-site investigations regarding this matter, but is currently deliberating on the timing, method, and scope of the full-scale investigation due to the spread of the novel coronavirus disease (COVID-19).
According to financial supervisory authorities and the financial sector on the 28th, the FSS has received about 300 dispute resolution applications related to suspicions of incomplete sales of Lime funds as of today. The FSS explained that applications significantly increased from last week to early this week.
On online cafes where Lime fund victims gather, posts encouraging or recommending applying for dispute resolution with the FSS before filing lawsuits are appearing one after another.
For example, in an online cafe called 'Lime Asset Management Redemption Suspension Victims Group,' it was explained that it is better to target the sellers with whom contracts were made, rather than Lime Asset Management itself, by applying for dispute resolution with the FSS. Additionally, posts guiding the details and methods of dispute resolution applications submitted by individuals have recently appeared consecutively.
The FSS planned to start on-site investigations early next month targeting Lime Asset Management and sellers through a joint on-site investigation team centered on the Dispute Resolution Division 2, involving related inspection departments such as the Asset Management Inspection Bureau, General Banking Inspection Bureau, and Financial Investment Inspection Bureau. It is known that the deployment of personnel and preliminary document review procedures for this purpose were recently completed.
The FSS set the first on-site investigation targets as Woori Bank and Hana Bank, which sold many trade finance funds including Shinhan Financial Investment, in accordance with its policy to first investigate trade finance funds where illegal activities have been substantially confirmed.
An FSS official said, "There is no problem starting the investigation immediately, but considering the spread of COVID-19 and the government's response policies, we are in a difficult situation," adding, "We will need to review the investigation schedule while observing future developments."
On-site investigations involve close contact with employees of the financial companies concerned. Moreover, the FSS planned to conduct three-party interviews during the on-site investigations with Lime Asset Management and seller staff, complainants, and private bankers (PBs).
Meanwhile, the Criminal Division 6 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Cho Sang-won) sent prosecutors and investigators to Daishin Securities, Woori Bank headquarters in Jung-gu, Seoul, and KB Securities headquarters in Yeouido yesterday to seize various materials related to the sale of Lime funds. Earlier, on the 19th, the prosecution had conducted searches and seizures at Lime Asset Management and Shinhan Financial Investment.
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