Ha-won Jang, CEO of Discovery Management, arrested and charged with fund sales fraud

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Ha-won Jang (pictured), the CEO of Discovery Asset Management, who is suspected of ‘fund fraudulent sales’, has been arrested and indicted. Jang is the younger brother of former Ambassador to China Jang Ha-seong.

The Seoul Southern District Prosecutor’s Office’s Financial Investigation Division 2 (Chief Hee-man Chae) is the CEO of an asset management company that sold a fund worth 134.8 billion won by deceiving investors that it is a safe investment that guarantees high returns even though it has invested in insolvent US peer-to-peer (P2P) loan bonds on the 4th. Ha-won Jang, 62, was arrested and charged with violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and the Capital Market Act. The prosecution indicted Mr. A (42), the head of the investment division of the same asset management company as Mr. Jang, and Mr. B (36), the manager of the management team, on the same charges.

The investigation into the so-called ‘discovery incident’ began in May of last year when the Financial Crimes Investigation Unit of the Seoul Metropolitan Police Agency began an internal investigation. Two months later, the police raided Discovery Asset Management and applied for arrest warrants for Jang and A in May. Prosecutors rejected the police’s request once saying that a supplementary investigation was necessary, and after receiving another request for an arrest warrant from the police, they filed a request for an arrest warrant with the court on the 2nd of last month. The court issued an arrest warrant for Jang on the 8th of last month, but dismissed the warrant for Mr.

According to the prosecution, since April 2017, while selling funds from US asset management companies, Jang established a special purpose corporation in a tax haven since August of the same year and established a special purpose corporation in a tax haven after fears of stopping the redemption of funds due to the insolvency of loans, which are the underlying assets. The US asset management company overcame the crisis of halting redemption by purchasing a loan of $55 million at par.

Then, in October of the following year, as a result of due diligence on the loan, Jang offered 121.5 billion won worth of funds to investors for about four months from the same month to February 2019, even though a loss of about $40 million was expected due to the failure to repay the principal. sold Prosecutors determined this to be a violation of the Special Cases Act (fraud) and the Capital Market Act.

From March of the same year, the CEO of a US asset management company was accused of fraud by the US Securities and Exchange Commission (SEC) and resigned as the CEO. sold An official from the prosecution explained, “During this process, Mr. Jang presented documents with false information about important matters to investors.”

The prosecution evaluated that “the prosecution and the police communicated closely from the beginning of the investigation and were issued search and seizure warrants and arrest warrants, and reasonable results were obtained through mutual cooperation.” “It is a financial fraud case that caused Jang to inflict irreparable damage to the Korean people,” he said.

Reporter Lee Kwang-sik bumeran@hankyung.com

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