Daishin Securities' Sentence Reduced in 2nd Trial for Negligence in Lime Fund Sales Supervision... Fine Reduced from 200 Million to 100 Million Won

Daishin Securities, which was fined in the first trial for neglecting its duty to manage and supervise employees who sold Lime Asset Management funds, received a reduced sentence in the appellate court.

The Seoul Southern District Court Criminal Division 2-2 (Presiding Judges Kim Ji-suk, Kim Seong-won, Lee Jeong-gwon) on the 30th sentenced Daishin Securities to a fine of 100 million KRW in the appeal trial on charges of violating the Capital Markets Act. This amount is lower than the 200 million KRW fine imposed by the first trial court.

Daishin Securities Building. Photo by Daishin Securities

The court stated, "This transaction adversely affected the fairness and reliability of the capital market, making an appropriate punishment inevitable," but also explained the reason for the reduced sentence, saying, "The company did not completely fail to establish internal control standards, additional compensation or deposits have been made from the first trial to the current appeal, resulting in about 97% recovery of damages, and considering the sentencing in similar cases and the disciplinary results from the Financial Services Commission, the original sentence was excessively harsh and unjust."

Jang, former head of Daishin Securities Banpo WM Center, was sentenced to two years in prison and fined 200 million KRW for selling Lime funds worth approximately 200 billion KRW to 470 people between 2017 and 2019 by falsely explaining the rate of return while concealing the possibility of losses.

The prosecution indicted Daishin Securities as a corporation in January 2021 under the principle of joint punishment, alleging that it neglected its duty to manage and supervise former center head Jang. The Capital Markets Act stipulates that if an employee of a corporation commits illegal acts such as fraudulent transactions related to personal work, the corporation shall also be fined (joint punishment regulation).