Court rules in favor of Tong Yang victims

By Choi Kyong-ae

A Seoul court ruled Friday in favor of a group of customers who filed a suit against Tong Yang Group’s former brokerage unit which sold commercial papers of financially-troubled group affiliates to them.

On Thursday, the Seoul Central District Court ordered Yuanta Securities Korea, formerly known as Tong Yang Securities, to pay differentiated compensation to each plaintiff depending on their investment loss, a court spokesman said.

Eight investors lost most of their investments into irregular corporate bonds and commercial papers issued by five Tong Yang affiliates _ Tong Yang Cement, Tong Yang Networks, Tong Yang International, Tong Yang Inc. and Tong Yang Leisure in late 2013 _ which filed for court receivership shortly afterwards.

This was the first ruling out of many lawsuits filed by investors in recent years against Yuanta Securities Korea. The litigants asked Yuanta to pay them a total of 235 million won in damages, according to the court spokesman.

Back in 2013, about 46,000 individuals reportedly suffered nearly 2 trillion won in combined investment losses and some of them took the matter to court.

“The first court decision may affect similar legal disputes underway between other plaintiffs and the brokerage over hefty investment losses in Tong Yang products,” the spokesman said.

Last month, the Supreme Court upheld the seven-year prison term given by a lower court to the former Tong Yang Group Chairman Hyun Jae-hyun on charges of instructing his staff to sell fraudulent investment products to investors without publicizing the risks.

Of the five Tong Yang affiliates which went under court protection, Tong Yang Cement, Tong Yang Networks and Tong Yang Leisure have graduated from workout programs, according to Yuanta Securities.

In June last year, Taiwan’s Yuanta Holdings acquired a 51 percent stake in the “then undervalued” Tong Yang Securities for 275 billion won ($240 million) as it was seeking a presence in the Korean market, a spokesman for Yuanta Securities said.