A court ruled to cancel the three-month suspension imposed by financial authorities on former KB Securities CEO Yoon Kyung-eun over the "Lime scandal," saying the disciplinary action was unjust.
The 13th Division of the Seoul Administrative Court (Presiding Judge Jin Hyun-seop) on Feb. 5 ruled to cancel the Financial Services Commission's notice imposing a three-month suspension on Yoon in a lawsuit Yoon filed against the Financial Services Commission to annul the disciplinary notice.
The Lime scandal refers to a financial fraud case with damages of about 1.6 trillion won. It began in July 2019 when suspicions arose that Lime Asset Management was managing returns through "rolling over funds."
Lime Asset Management recruited investors by saying it could deliver annual returns of 5%–8% and at one point in 2019 managed funds totaling nearly 6 trillion won. Then, amid suspicions of "rolling over funds," a large number of investors requested redemptions, triggering a "fund run," and Lime Asset Management halted fund redemptions in Oct. 2019.
Financial authority inspections found that Lime Asset Management knew that the overseas trade finance funds in which its funds had invested were involved in a multilevel financial fraud (Ponzi scheme) but did not inform investors. It also took kickbacks while investing in convertible bonds (CB) and bonds with warrants (BW) of insolvent companies.
On Nov. 29, 2023, the Financial Services Commission (FSC) voted to impose disciplinary measures on seven financial companies related to the Lime scandal. It decided on a three-month suspension for then-KB Securities CEO Park Jung-lim and former CEO Yoon Kyung-eun for violating the obligation to establish internal control standards and for providing leveraged funds to the funds. Yoon served as KB Securities CEO from Jan. 2017 to Dec. 2018 and had retired at the time of the discipline.
Yoon then filed an administrative suit, saying the discipline was unjust. The Seoul Administrative Court said, "KB Securities' internal control standards do not appear to be merely formalistic standards that could not achieve at all the purposes and functions intended by the legal requirements."
It continued, "On Mar. 31, 2019, the Financial Supervisory Service evaluated KB Securities' internal control system as appropriately established," adding, "Therefore, the (three-month suspension against Yoon) disposition is unlawful and must be canceled because not all of the grounds are recognized."