South Korean financial firms may be victims of an alleged $50 billion fraud by a big-time U.S. financier, Yonhap News reported Saturday.
Citing unnamed industrial sources, Yonhap said more than 10 local financial institutions including Korea Life Insurance may face at least $100 million in losses after investing in hedge fund Fairfield Sentry Ltd. which entrusted former chairman of the Nasdaq Stock Market, Bernard Madoff, with billions of dollars.
On Thursday, the U.S. Federal Bureau of Investigation arrested Madoff on charges of securities fraud in what is called a Ponzi scheme, a pyramid-type swindle that promises early investors with high returns with money from newcomers.
"We are checking which company has invested in this hedge fund," said an official at the Financial Supervisory Service, the country's financial watchdog.