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Preventing Unwarranted Damages in Loophole-Ridden Foreign Investments through Lawsuits
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In recent years, the rapidly expanding domestic capital market has seen financial investment companies going abroad to bring overseas investment products into Korea under the theme of 'enhancing global competitiveness', resulting in a series of cases where domestic investors have lost up to hundreds of billions of Korean Won due to the lack of verification (due diligence) of such overseas financial products, such as the default of the bonds issued by China International Energy Recycling Corporation (CERCG), a Chinese state-owned company.

Financial litigation is not easy as it involves penetrating the highly complex and esoteric structure of financial investment products and pinpointing the loopholes; accordingly, the more difficult the case, the more competent the experts must be. EDAILY met with attorneys Hyun Sang Youn (U.S.), Yoon Min Rah, Hong Won Lee, and Min Gu Kang from the finance team at Lin, who have been active in numerous financial investment litigation cases in the domestic capital market.

[LIN_(From left) Hyun Sang Youn, U.S. Attorney, Yoon Min Rah, Hong Won Lee, and Min Gu Kang]

Before the CERCG case, there were no reasonable standards for the due diligence obligations of financial firms that broker financial products in Korea, and there was no explicit concept in the Capital Markets Act, so the duty of due diligence was no more than a moral obligation or mere recommendation despite its importance. This case, in which Lin proved insufficient due diligence by financial firm, is expected to serve as an important milestone case in the future for similar cases.

The original article can be found below.

Reporter, Jiyoung Lee, EDAILY
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