LS Securities has effectively concluded its compensation dispute with investors over the asset-backed commercial paper (ABCP) default involving China Energy Conservation and Environmental Protection Group (CERCG). The Seoul High Court issued a recommendation for settlement in the lawsuit with investors, and LS Securities is set to pay the determined compensation.
On July 15, LS Securities announced through a public disclosure that the settlement recommendation from the Seoul High Court regarding the unjust enrichment claims filed by ABCP investors Hyundai Motor Securities, BNK Investment Securities, KB Securities, and Busan Bank has been finalized.
This decision follows a Supreme Court ruling on a lawsuit filed by investors against Hanwha Investment & Securities and then eBest Investment Securities (now LS Securities) after the default of the CERCG-related ABCP.
The Seoul High Court ruled that in the case involving Hyundai Motor Securities, LS Securities and Hanwha Investment & Securities are jointly liable to pay 24.564 billion won, along with delayed damages at an annual rate of 5% from November 9, 2018, until January 13, 2023, and 12% thereafter until payment is completed. Hyundai Motor Securities agreed to waive all other claims and to bear its own litigation costs.
In addition, the joint payment amount was set at 9.825 billion won for BNK Investment Securities and 9.828 billion won for KB Securities. For the Busan Bank case, the court decided that LS Securities must pay 9.833 billion won related to delayed damages, excluding the principal amount confirmed before the remand.
LS Securities stated that it plans to pay the compensation to the plaintiffs in accordance with legal procedures, and once the payments are completed, the cases will be considered resolved.
However, the disclosed payment amounts are based on the principal shared between LS Securities and Hanwha Investment & Securities, and the actual amount LS Securities will bear will be a portion determined by an agreed-upon sharing ratio between the two companies.
The CERCG ABCP incident is a large-scale financial dispute that arose in 2018 due to the default of CERCG, a state-owned enterprise in China, which led to the deterioration of the underlying assets. Investment institutions have filed lawsuits against LS Securities and Hanwha Investment & Securities, claiming unjust enrichment during the issuance and sale of the ABCP. With the confirmation of this settlement recommendation, the civil disputes with major institutional investors are effectively nearing resolution.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.