A Seoul court on Friday sentenced a former executive of Shinhan Investment Corp., one of South Korea's major financial investment companies, to eight years in prison for deceiving investors to buy faulty fund products related to a massive fund scandal that has shaken the country since last year.
The Seoul Southern District Court handed down an eight-year prison term and a fine of 300 million won ($256,235) to the man, surnamed Lim charged with fraud and violation of capital market and financial investment laws.
The prosecution had demanded 12 years in prison and a fine of 300 million won earlier this month.
Lim was indicted in April for allegedly selling fund products of Lime Asset Management Co., worth some 48 billion won ($50 million), without informing people that the products carry defects.
He was also found to have merged 17 underperforming funds of Lime Asset with another 17 profitable ones to conceal losses, thereby inflicting financial damage to investors.
"Recruiting investors and receiving investments from them based on fund purchasing proposals carrying inaccurate information constituted fraud," the court said.
"The defendant's acts severely damaged the public's trust in financial workers," the court added, emphasizing that the capital market law demands strict social responsibility from those working in financial institutes.
Lim was also accused of receiving 165 million won in bribes from another company in return for helping it receive a 5 billion-won investment from Shinhan Investment Corp.
In August last year, the Financial Supervisory Service began looking into the allegations that Lime Asset had deceived investors and covered up massive losses. The company has since suspended fund redemption worth an estimated 1.6 trillion won ($1.3 billion).
The Seoul Southern District Prosecutors Office indicted Lime Asset's CEO Won Jong-jun in July on charges of fraud and violations of capital market and financial investment laws. Several other executives are currently on trial. (Yonhap)