NH Investment mulls over how to compensate Optimus fund investors

Headquarters of NH Investment & Securities / Courtesy of NH Investment & Securities

By Anna J. Park

NH Investment & Securities seems to be in a quandary over how to compensate scandal-ridden Optimus fund investors.

CEO Chung Young-chae and other officials at the company held hours-long talks with representatives of the fund investors at the firm's headquarters Thursday, but could not reach a deal.

An official of the firm explained that as key decisions must be approved by the company board, Thursday's meeting was aimed at fully listening to investors' opinions on compensation. An extra board meeting is slated to be held Aug. 27.

“There have been weekly meetings between investors and company officials since Optimus Asset Management failed to redeem the funds,” the official said.

“The firm is trying its best to minimize the damage to affected investors. As it could take a few more months to completely confirm the size of the funds' losses, the firm is considering ways to provide emergency liquidity to investors,” the official added.

The brokerage attracted an aggregate investment of 432 billion won ($364 million) into the mutual funds from 881 retail investors and 168 institutional or corporate investors. This makes up the largest portion of the funds entire 515 billion won.

After Optimus Asset Management asked the funds' “sellers” to extend its maturity period and ended up suspending funds redemptions in mid-June, the affected investors formed an emergency committee, urging the brokerage firm to come up with an appropriate compensation plan.

Korea Investment & Securities ― another “seller” of the fund ― already completed payments 70 percent of the principal to Optimus fund investors. That's why some investors at NH Investment asked the firm to pay back at least 70 percent of their money immediately, in accordance with this precedent.