Korean Reinsurance Co. is taking legal action against KB Securities Co. Ltd. and JB Asset Management Co. Ltd. to seek damages over alleged mismanagement of a fund, The Korea Times reported, citing a source.
The lawsuit follows a real estate investment fraud involving JB Australia NDIS Fund, which was originally set up to invest in businesses associated with the Australian government's housing policy for the disabled.
The fund's seller KB Securities secured 236 billion won from institutional investors and 90.4 billion won from individual investors and corporate bodies between March 2019 and June 2019, which fund manager JB Asset lent to LBA Capital. Both companies took legal action against LBA Capital in September 2019 alleging that the Australian borrower violated a contract by purchasing land with money borrowed from the fund.
KB Securities returned the money to individual investors and corporate bodies in November 2019 after retrieving around 85% of their investments. However, the brokerage refused to do the same for institutional investors, citing their "ability to take risks from investments."
The Korea Federation of Community Credit Cooperative and the National Forestry Cooperative Federation have joined Korean Re's lawsuit, while other institutional investors including IBK Insurance Co., Ltd., are also preparing for legal action, sources told the outlet.
The South Korean reinsurance company has also referred KB Securities and JB Asset to the Seoul Southern District Prosecutors' Office, the source added.
As of Jan. 1, US$1 was equivalent to 1,152.40 South Korean won.