Court orders asset manager to compensate record-high 6.1 bln won

(ATTN: ADDS Woori's response in para 7-9)
SEOUL, Nov. 23 (Yonhap) -- A Seoul court ordered an asset management firm and a
bank to pay 6.1 billion won (US$5.25 million) to over 200 investors to compensate
for their losses, the largest amount ever awarded in a damages suit, court
officials said Monday.
The 214 plaintiffs in the case had invested in an equity-linked fund (ELF)
managed by Woori Asset Management and sold by Hana Bank in 2007. The fund had
attracted 28.4 billion won from some 980 investors.
The plaintiffs charged that they lost their money because Woori and Hana invested
in an over-the-counter derivative issued by the now-defunct Lehman Brothers, not
in BNP Paribas as stated in the contract.
"The investors have suffered losses because the asset management firm changed the
derivative operating company unilaterally," the court said in the ruling. "The
firms (Woori and Hana) are responsible for the losses as they breached the
contract agreed with the investors."
The case marks the first time that the court has held an asset manager fully
responsible for a failed investment. Judges in previous suits have recognized the
fault of asset managers up to only 50 percent.
The ruling is likely to affect two other pending suits against Woori's fund, as
well as other similar cases.
Woori Asset management said it will appeal the ruling.
"Woori will enter an appeal as such a practice is widespread in the local
industry," the company's chief executive, Rhee Jung-chul, told reporters after
the decision was announced.
The ruling severely hampers asset managers' autonomy to fund management, and the
contract does not forbid changes of derivative operating firms, a company lawyer
said, adding Woori also made a regulatory filing after the change was made.
pbr@yna.co.kr
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