Lime Fund redemptions favored lawmaker: FSS chief

Financial Supervisory Service (FSS) governor Lee Bok-hyun is answering at the National Policy Committee meeting at the National Assembly on Sep. 4. [Photo by Yonhap]

Lime Asset Management, the asset management firm behind the controversial Lime fund, and Mirae Asset Securities, the fund seller, retuned funds to an investor knowing that this investor was a high-ranking government official, the head of South Korea’s top financial watchdog agency said on Monday.

“Both the fund operator and the seller manage the list of beneficiaries (investors). What is clear is that both believed the funds were from a high-ranking government official and took action (redemptions) accordingly,” Financial Supervisory Service (FSS) governor Lee Bok-hyun told lawmakers during a National Policy Committee meeting at the National Assembly on Monday, emphasizing that these actions constitute “clear violations of the Capital Market Act and are illegal.”

On August 24, the FSS said that Lime Asset Management had provided preferential redemptions totaling 200 million won ($160,000) to a multi-term legislator just before the fund suspended redemptions to multiple investors in September 2019. According to the FSS, Lime Asset Management used funds from other investors, totaling 12.5 billion won, along with 450 million won from its own capital to facilitate early redemptions in four funds for the legislator. Four-term parliamentarian Kim Sang-hee of the Democratic Party was identified as the beneficiary, but Kim strongly denied the allegations.

Kim claimed that Lee visited her office the day after the FSS announcement and apologized multiple times, suggesting that Kim might release their recorded conversations in the future. But the FSS countered her claim by saying that there was no apology or expression of regret during the conversation.

During the committee meeting on Monday, Lee also requested that Kim and other Democratic Party lawmakers “release all the recordings that Kim is referring to,” adding that “after listening to the full recording, many lawmakers and the public will be able to judge the matter.”

Regarding the possibility of running in next year’s election, Lee responded, “I have no plans to enter politics,” instead emphasizing the need for strict measures against individuals who undermine the capital market.