Police Conduct Search and Seizure at IBK Following Hana Bank in 'Discovery Fund Redemption Suspension' Case (Comprehensive)

Representative Jang Ha-won is banned from leaving the country

[Asia Economy Reporter Lee Gwan-joo] The police investigating the suspension of redemptions of the Discovery Asset Management (Discovery) private equity fund have conducted a search and seizure at IBK Industrial Bank of Korea, following Hana Bank, the fund’s distributor.

According to the police on the 23rd, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency sent investigators to the headquarters of IBK Industrial Bank of Korea in Jung-gu, Seoul, to carry out a search and seizure. The police are reportedly conducting this operation to secure documents related to the fund.

From 2017 to 2019, IBK Industrial Bank of Korea sold the 'Discovery US Fintech Global Bond Fund' and the 'Discovery US Real Estate Senior Secured Bond Fund' in amounts of 361.2 billion KRW and 318 billion KRW, respectively.

The police had conducted a search and seizure at Hana Bank, one of the financial institutions that sold Discovery fund products, the day before. The Discovery fund suspended redemptions due to issues such as the court receivership of the local US asset management company. The known damage amounts to several hundred billion KRW. According to the Financial Supervisory Service, as of the end of April this year, the outstanding balance that banks and others have failed to repay due to the suspension of redemptions is estimated at approximately 256.2 billion KRW.

Additionally, the police have imposed a travel ban on Jang Ha-won (62), CEO of Discovery. CEO Jang is the younger brother of Jang Ha-sung, former Blue House Policy Chief and current Ambassador to China. He served as the head of Hana Financial Research Institute from 2005 to 2008 and founded Discovery in 2016.

As it is known that several commercial banks are included among the distributors of the Discovery fund, it is expected that the police investigation will likely expand in the future.

The police are reported to have been conducting an internal investigation into this case for several months. Regarding CEO Jang, they are considering applying charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act.