Posted November. 24, 2009 07:34,
The Seoul Central District Court yesterday ordered Woori Asset Management and Hana Bank to fully compensate the losses of 214 investors estimated at 6.1 billion won (5.3 million U.S. dollars), the highest amount of damages awarded in a fund-related lawsuit.
The 214 people had filed the suit after losing all of their money after investing in an equity-linked fund (ELF).
Investors initially invested their money in the Woori Two Star KW-8 fund on the belief that the fund invested in over-the-counter derivatives from the overseas financial company BNP Paribas.
Woori initially planned to attract 20 billion won (17.3 million dollars), but 980 investors poured in 28.4 billion won (24.6 million dollars) due to the surging popularity of fund investment. As the fund grew larger than expected, BNP Paribas declined to run it.
Accordingly, Woori chose as a replacement Lehman Brothers, which had a similar credit rating and fund management capabilities. After Lehmans bankruptcy triggered the global financial crisis last year, however, the funds investors lost all of their money.
Investors filed three lawsuits against the fund. In May, a domestic court ruled that investors could not hold Woori responsible. The initial copy of the investment explanation did not stipulate that the fund management company could not change issuers of securities. A fund management company has the discretion to change its partner for higher investment gains under certain restrictions, the ruling said.
Woori told a news conference that it will appeal yesterdays ruling. Rhee Jung-chul, CEO of Woori Asset Management, said, I feel confused since two similar lawsuits resulted in different rulings. No one could have expected the bankruptcy of Lehman Brothers, which had maintained an A credit rating just before its collapse.
Well definitely take responsibility for our mistakes, but well also make an all-out effort to find out whether we were really at fault.