Regulator reprimands financial executives over hedge fund scandal
SEOUL, Nov. 11 (Yonhap) -- South Korea's financial regulator has reprimanded five incumbent and former executives of brokerage companies over a major hedge fund fiasco.
Lime Asset Management Co., the nation's biggest hedge fund, has been under regulatory investigation since last year after it suspended fund redemption.
Citing a cash crunch, Lime froze withdrawals from a trade financing fund worth an estimated 244 billion won (US$206 million) in October last year, sparking an outcry from angry investors.
The five executives included Park Jeong-rim, chief executive of KB Securities and Kim Hyung-jin, former president of Shinhan Investment Corp., according to the Financial Supervisory Service (FSS).
They were suspected of misselling fund products of Lime Asset Management, the FSS said.
The Lime scandal began to unfold in July last year when the FSS began probing Lime's suspected irregularities, forcing spooked investors to scramble to withdraw their money.
The watchdog's inquiry centered on suspected fraud and misselling by Lime and three sales agents -- KB Securities, Shinhan Investment and Daeshin Securities Co.
Lime 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.
kdh@yna.co.kr
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