Posted September. 26, 2008 14:30,
More than 130 companies will file class action lawsuits for hundreds of billions of won against banks that sold knock-in, knock-out (KIKO)" currency options, with the options reportedly incurring losses exceeding one trillion won (866 million dollars) this year alone.
Banks did not properly explain the risks of KIKO. We plan to file both a lawsuit and take other legal action invalidating liability, the Joint Countermeasure Committee of KIKO Victims said yesterday. The committee said banks forced companies to purchase KIKO options under unfair provisions.
On behalf of 136 companies that say they suffered from KIKO options, the committee is working with DeRyook International Law Firm, Logos Attorneys at Law, Ahnse Law Office and Prime Law to sue about a dozen banks, including Shinhan, Korea Exchange and Citibank.
S&T Motors, a motorcycle manufacturer and exporter, filed a lawsuit against SC First Bank Aug. 20 for 110 million won.
Due to the drop in the wons value, Taesan LCD, which saw sales of more than 600 billion won last year, had to file for bankruptcy, though it had been in the black. The presidential office of Cheong Wa Dae also announced it will help the victims of the risk-hedging vehicle.
The Financial Supervisory Service said 39 conglomerates lost 270 billion won and 480 small and medium companies 800 billion won from the currency options. As losses are expected to keep snowballing unless the dollar weakens, the amount of compensation companies will seek through lawsuits will likely reach hundreds of billions of won.