Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Korea Investment & Securities accused of bullying startup
Korea Investment & Securities headquarters in Seoul / Yonhap
By Lee Min-hyung
By Lee Min-hyung
Korea Investment & Securities is embroiled in a controversy over what a Seoul-based fintech startup called an “unfair and deceiving” contract on establishing the former's web trading system.
The controversy is centered on an equity investment worth 1 billion won ($755,000) that the brokerage house made on Indexmine in January 2021. Under the contract, the startup developed the service for the securities firm's platform division but has since not been compensated properly, according to Indexmine.
“At the time, Korea Investment & Securities offered to pay for costs incurred in developing and operating the service, and we accepted the proposal and signed the contract,” Indexmine CEO Park Sang-woo said. “But the securities firm has since declined to do so. We did not receive any financial rewards in 2021 and 2022. The company abruptly changed its stance, saying that we have to work exclusively for the securities firm without asking for any further payment for operation-related costs.”
The founder of Indexmine ended up sending a legal document asking for the brokerage house's audit team to monitor the platform division for any unfair business practices.
“But we received a reply containing threatening messages that we will face a suit if the incident is reported to the Fair Trade Commission (FTC) or the Financial Supervisory Service (FSS),” he said. “The audit team disregarded our request and cooperated with the platform division.”
Park also argued that the securities firm launched a web trading system service with KakaoBank in December, which contains ideas and technological elements that Indexmine presented to Korea Investment & Securities.
“The brokerage house took business secrets from us and cut us off in the end,” he said.
With both sides failing to iron out their difference, Indexmine reported the case to the FTC in December 2022. It is still under review by the watchdog's dispute resolution committee.
“But when a report was released earlier this year that Indexmine reported Korea Investment & Securities to the FTC, the firm's audit team contacted us, so we submitted relevant evidence ― including documents, mobile messages and voice recordings,” he said. “But it was futile this time again. The team pretended to conduct an inspection with a neutral attitude only after the issue was reported by a local media outlet. We requested the audit team to get the facts straight, and let us know if we have made any false arguments, but it has not refuted us at all.”
The startup also brought the case to the FSS on Feb. 12 under the judgment that the company cannot make a settlement with the securities firm without third-party intervention.
“To resolve the problem, we have earnestly appealed to the Korea Investment & Securities' platform division, audit team and management multiple times in the past year,” Park said. “But the company inflicted additional damage on us by unfairly canceling the contract and sending threatening messages. We are waiting for responses from the FTC and the FSS.”
The securities firm, however, said it has not engaged in any sort of business malpractice under the contract with Indexmine.
The brokerage house refuted the startup's argument, saying that Indexmine was “too demanding” and has repeatedly made requests that extend beyond the scope of the contract since establishing the partnership.
“All the problems arose as the company demanded excessively beyond what was stated in the contract,” a spokesman at the securities firm said, declining to comment further, due to the ongoing review. “We are awaiting the settlement result from the FTC.”