KB Securities entangled in investment fraud abroad
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.”
KB Securities headquarters in Seoul