KB Se­cu­ri­ties en­tan­gled in in­vest­ment fraud abroad

The Korea Times - - FINANCE - By Park Jae-hyuk [email protected]­re­atimes.co.kr

KB Se­cu­ri­ties and JB As­set Man­age­ment have been en­tan­gled in over­seas real es­tate in­vest­ment fraud in Aus­tralia due to a lo­cal bor­rower’s breach of con­tract there, which is likely to in­cur up to 100 bil­lion won ($82.7 mil­lion) in losses for in­sti­tu­tional and in­di­vid­ual in­vestors.

The bro­ker­age said Wed­nes­day the two Korean fi­nan­cial firms started an emer­gency fund with­drawal re­cently from LBA Cap­i­tal, since they found out the Aus­tralian bor­rower of JB Aus­tralia NDIS Fund used the money for dif­fer­ent pur­poses.

Ac­cord­ing to the se­cu­ri­ties firm, JB Aus­tralia NDIS Fund, set up by JB As­set Man­age­ment, is a pri­vate eq­uity fund (PEF) that in­vests in busi­nesses re­lated to the Aus­tralian gov­ern­ment’s hous­ing pol­icy for the dis­abled.

KB Se­cu­ri­ties, which was in charge of sales of the fund, at­tracted 326.4 bil­lion won in in­vest­ments be­tween March and June — 236 bil­lion won from in­sti­tu­tional in­vestors and 90.4 bil­lion won from in­di­vid­ual in­vestors and cor­po­rate bod­ies.

JB As­set Man­age­ment lent the money to LBA Cap­i­tal so the Aus­tralian bor­rower could buy homes, re­model them and re­ceive sub­si­dies from the Aus­tralian gov­ern­ment for ac­com­mo­dat­ing dis­abled peo­ple.

Dur­ing KB Se­cu­ri­ties’ on-site in­spec­tion, how­ever, it was re­vealed that LBA Cap­i­tal bought land — not homes — as the price of apart­ment build­ings went up amid the over­heat­ing of the real es­tate mar­ket there.

KB Se­cu­ri­ties said the two Korean firms be­gan le­gal ac­tion af­ter hir­ing in­ter­na­tional com­mer­cial law firm Al­lens.

“We have re­trieved 201.5 bil­lion won in cash and the County Court of Vic­to­ria or­dered an as­set freez­ing of LBA Cap­i­tal’s cash and real es­tate worth 88.2 bil­lion won,” a KB Se­cu­ri­ties of­fi­cial said. “We will re­trieve the re­main­ing funds by claim­ing dam­ages against LBA Cap­i­tal and its three ex­ec­u­tives.”

Korea Times file

KB Se­cu­ri­ties head­quar­ters in Seoul

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