Former and current heads of Fidelis Asset Management (now YK Asset Management), who were brought to trial over allegations of misselling a 180 billion won private fund, were acquitted at the first trial.
The Seoul Southern District Court Criminal Agreement Division 11 (Presiding Judge Jang Chan, Director General) on the 19th acquitted three former and current executives, including a person surnamed Kim, the CEO, and a person surnamed Jang, the former CEO, who were indicted on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes. The company as a corporate entity was also acquitted.
They sold and managed the "Fidelis Fund," which invests in accounts receivable of a Singapore trading company, to about 380 people in the amount of 180 billion won, but failed to repay the principal after maturity in Feb. and June 2021 as COVID-19 spread. They were later indicted on charges of making false or insufficient entries in the product brochure regarding insurance enrollment and credit verification.
Prosecutors saw a problem with the portion of the brochure that, in effect, said "insurance was purchased for the fund, and the insurer verified the creditworthiness of the trading company's counterparties."
In response, the court found that the brochure's contents were not false, and it was difficult to recognize intent even where some facts were omitted. It also found that, because insurers strictly review counterparties' ability to pay when deciding whether to approve insurance, writing that the buyer's creditworthiness was verified through insurance enrollment was not a false or insufficient entry.
It added that even if certain items, such as disclaimers regarding the insurance, were omitted from the brochure, it did not appear intentional.
Prosecutors plan to decide whether to appeal after reviewing the first-trial ruling.