A dispute over a German overseas real estate fund, which has resulted in total losses for investors, has escalated to the courts. While major distributors, including Kookmin Bank, have initiated voluntary compensation procedures, investors from Hana Bank have begun legal action against the bank.
According to the financial sector on July 6, Hana Bank investors filed for damage compensation on July 1, claiming that the public fund "Global Real Estate Investment Trust No. 229" (Trianon Fund) was sold improperly. The claim amounts to 70% of the losses, excluding dividends already paid from the investment.
The fund invested in the Trianon office building in Frankfurt, Germany. Following a downturn in the global real estate market exacerbated by the COVID-19 pandemic, the fund has entered bankruptcy proceedings. During its offering, the fund raised 186.8 billion won from individual investors, but now all invested capital has been lost.
A total of 14 financial institutions, including banks and securities firms, sold this fund. Among them, Kookmin Bank and Woori Bank, along with Korea Investment & Securities and Hana Securities, have either completed compensation or are currently in the process of voluntary adjustments. The compensation rates vary by distributor, ranging from a basic 20-40% to a maximum of 100%.
Hana Bank is the second institution to seek court mediation, following Hanwha Investment & Securities. Investors argue that the risks associated with the product were not adequately explained during the sales process, and they were not properly informed about the potential for principal loss, claiming violations of suitability principles and disclosure obligations.
This mediation request is expected to have significant implications for other distributors, as it arises amid a trend of voluntary compensation. Investors dissatisfied with the compensation rates or those who do not receive compensation may pursue further legal action.
The Financial Supervisory Service maintains that it fundamentally supports the principle of voluntary adjustments. A representative stated, "Disputes over investment products should be resolved through voluntary agreements between the distributor and the investor," adding that specific compensation rates will be determined by each distributor based on individual circumstances and the sales process for each investor.
Lee Seong-woo, a lawyer from Hanbyeol Law Firm representing the case, noted, "Many overseas real estate funds were launched around 2018 during a low-interest period, and issues have continued to arise since then. The Hana Bank Trianon Fund lacked sufficient explanations regarding its risks, which is one of the most common reasons for improper sales."
* This article has been translated by AI.
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