Minority shareholders file first suit against scrapped stocks

The minority shareholders of failed banks, who stand to have all of their shares scrapped following the government announcement to that effect, have brought charges to court.

"Relying on the pledge by the government to assist the banks with public funds, I invested in a bank, now to my detriment," an elderly man, identified only as Ahn, 65, of Taejon said Dec. 20.

A court proceeding against the Financial Supervisory Service(FSS) and Hanvit Bank that seeks 289 million won in damages has been lodged with the Seoul District Court.

"I trusted the news reports of the government's pledge to inject 1.67 trillion won into Hanvit Bank and purchased 173,800 shares in the bank in July," Ahn said in the court papers. "Afterward, as public discontent mounted, the FSS announced it would follow through on its pledge as soon as possible. For the government to scrap all the stocks now is an outright mockery of the minority shareholders."

As the contention rises concerning the blame between the bank management and the government for the decision to scrap the stocks, more such lawsuits might be brought to the courts. However, to receive damages, the plaintiffs are required to prove malicious or criminal intent on the part of the government in making the decision to scrap the stocks, a rather difficult feat.

Lee Jung-Eun lightee@donga.com