Lin recently led a victory for Winners Asset Management in an appellate court case against KB Securities regarding overseas derivative investment losses in Civil Division 18 of the Seoul High Court. In the court of first instance, concerning investment losses totaling 80 billion Korean won incurred in 2020, KB Securities' legitimacy in executing short sales according to the KOFIA agreement was acknowledged. However, Lin successfully overturned this decision in the subsequent appellate trial, leading to the victory for Winners Asset Management.

The lawsuit arose from an investment in options on the Nikkei 225 Index on the Osaka Exchange in Japan. In February 2020, as the stock market plunged due to COVID-19, KB Securities executed a countertrade on all put options on the Nikkei Index. KB Securities was responsible for the receivables arising from the countertrade, and later filed a claim for damages against Winners Asset Management, claiming unpaid receivables and delay damages. The first instance court recognized KB Securities' legitimacy in executing the countertrade based on Article 14 (2) of the Overseas Derivative Market Trading General Account Setting Agreement, but the appellate court ruled in favor of Winners Asset Management, taking the position that the provisions of the agreement violated the Capital Markets Act, considering the legislative purpose of the statute to protect investors and promote a sound trading order.

The ruling is expected to have a significant impact on the financial and legal communities and has led to a reconsideration of the authority of investment brokers and the purpose of the Capital Markets Act in protecting investors. “The principle of the Capital Markets Act, which prohibits unilaterally executed short sales without margin calls to lock-in investors’ evaluation losses, has once again been clearly affirmed through the judiciary,” said Jin Seok Lim, the Managing Partner of Lin, who represented Winners Asset Management in the appeal, adding that the ruling should serve as a wake-up call for financial investment firms to more closely scrutinize the terms and conditions that they sign.

Finance team of Lin accurately reads market changes in the rapidly changing financial environment and, based on its in-depth understanding of financial transactions, achieves the best results for our clients through organic collaboration and sophisticated litigation strategies with a group of experts from financial authorities, financial institutions, Korea Exchange, courts, and prosecutors, and creates noteworthy precedents based on its experience and accumulated knowledge in pioneering securities and financial transactions in Korea.

Please refer to the original article below.

- Source: Newspim & Hankyung
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https://newspim.com/news/view/20240130000800
https://n.news.naver.com/article/015/0004942122?type=journalists