Watchdog chief says he feels sorry over Lime fiasco

SEOUL, Feb. 20 (Yonhap) -- The head of South Korea's financial watchdog said Thursday he feels sorry for the controversy surrounding the suspension of fund redemption by the country's largest hedge fund Lime Asset Management Co.

Yoon Suk-heun, governor of the Financial Supervisory Service, said in a parliamentary session that he will help the fund come up with and implement its redemption plan.

The comments came as the watchdog prepares to launch an inspection into Lime's suspension of fund redemption early next month.

Citing a cash crunch, Lime froze withdrawals from a trade financing fund worth an estimated 244 billion won (US$206 million) in October, sparking an outcry from angry investors.

The Lime scandal began to unfold in July last year when the FSS began probing Lime's suspected irregularities, prompting spooked investors to scramble to withdraw their money.

The watchdog's upcoming inquiry is widely expected to center on suspected fraud and misselling by Lime and Shinhan Investment Corp., a major sales agent.

Lime, the top hedge fund by assets under management, is suspected of having concealed investment losses and inflated investment returns in a bid to keep its customer base.

In addition, the hedge fund was allegedly involved in a Ponzi scheme to cover losses and engaged in misselling, or selling products to customers without providing adequate information or explaining the high risks involved.

entropy@yna.co.kr
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