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Banks, brokerages to return principals to investors in fund misselling scandalBy Yonhap
Published : Aug. 27, 2020 - 22:02
Banks and brokerages that handled fund products by a local asset manager said Thursday they will return the principals on investments made by consumers, in line with the advisory issued by the country's financial regulator.
Hana Bank, Woori Bank, Mirae Asset Daewoo Co. and Shinhan Investment Corp. said their boards accepted calls to provide full refunds in regard to the misselling scandal centered on Lime Asset Management Co.
The dispute settlement board at the Financial Supervisory Service called on the four financial institutions to give back all principals in late 2018. The call marked the first time the watchdog had ordered such full compensation.
Lime Asset is accused of either falsifying or insufficiently stating key information of its fund products, with the banks and brokerages taking blame for also misleading consumers by providing inaccurate information about Lime without carrying out thorough checks on products. Initially, the four financial institutions contested the advice made by the FSS board.
"The move to repay investors reflects the need of the financial sector to protect consumers, regain trust and bolster financial market stability," an official from Woori said. This view was echoed by a Hana Bank insider who said that the most important factor now is to protect investors.
The decision means some 500 individual investors and 58 corporate investors could receive more than 150 billion won ($126.5 million).
Of the total, Woori and Hana are expected to pay back to consumers 65 billion won and 36.4 billion won, respectively, with the numbers for Shinhan and Mirae Asset Daewoo standing at 42.5 billion won and 9.1 billion won.
The four financial institutions said that while they will pay consumers for the trade finance fund fiasco, they will take firm action against Lime, including exercising their rights to indemnity, and demand compensation for damages incurred.
Lime executives have been arrested, with the company being accused of engaging in criminal offenses such as fraud. (Yonhap)
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