Korean Regulators to Revoke Lime Asset Management Licence

Subject to FSC approval, the FSS will revoke Lime's business registration and order the company to dismiss its CEO, who was arrested in July.

South Korea's FSS (Financial Supervisory Service) has decided to revoke the business registration certificate of Lime Asset Management, citing "numerous grave violations of law".

Lime Asset was managing a record high of KRW 5.7 trillion in assets as of June 2019. In October, the company froze withdrawals, citing an inability to liquidate enough assets to meet redemption requests.

Lime Asset is accused of providing inaccurate information about its fund products sold to customers through banks and securities firms.

Investigations by the FSS and prosecutors revealed earlier this year that Lime used a Ponzi scheme to manipulate the performance of feeder funds to mislead end-investors into funds that were suffering losses.

Approximately 4,000 investors, who invested nearly KRW 1.7 trillion in Lime Asset funds, are said to have been misled.

The revocation of a firm's business certificate is the strongest penalty the FSS can impose on a company for illegal acts.

The FSS has also ordered Lime Asset to dismiss its CEO, Won Jong-jun, from his position. Won was detained in July on charges of fraud and violations of capital market and financial investment laws.

The FSC (Financial Services Commission) will determine whether to confirm the business certificate revocation and Won's penalty as early as next month, the FSS said.

Following the revocation, the assets under Lime's control will be handed over to a bridge institution co-founded by 20 financial institutions responsible for misselling Lime's funds. The newly created institution will seek to recoup the losses and recover what the victims invested.

The FSS is also considering penalties for Shinhan Investment, KB Securities and Daishin Securities, who were major sellers of the Lime funds.

Additional reporting from Yonhap, Korea Herald.