The decision in favor of plaintiffs in the class action pursuant to the securities-related class action laws enacted on January 1, 2005 was finalized by the appeal of the defendant Deutsche Bank on July 7, In the past 12 years, nine of the class action lawsuits were terminated by reconciliation. Two cases were filed (Jinsung Tsi's counterfeit accounting case and Canadian Royal Bank's ELS ticker control case) to be.
On July 7, 2017, the first by the.3
Since the inception of the Securities-Related Class Action in Korea in January 2005, there was not a single class action case that ended with a court decision until July 6, 2017. (In the past 12 years, two cases have reached to conclusions but with settlement not by court decision.) But now by Deutsche Bank’s withdrawal of its appeal on July 7, 2017, the first-ever finalized court decision in securities-related class action came out. ingal of Deutsche Bank whe no case has ever there was no decision.
This case goes all the way back to August 8, 2009, which is the maturity date of ‘Rich Dad 289th ELS’ issued by Korea Investment & Securities. Rich Dad 289th ELS, which was sold to 514 investors in the amount of 19.89 billion won in August 2007, was a derivative product linked to shares of Kookmin Bank and Samsung Electornics, and was structured to yield a 28.6 percent return if, upon maturity, the shares closed higher than 75 percent of their price on the day the product was issued while prices lower than that would lead to investment losses. Korea Exchange found that Deutsche Bank massively had sold Kookmin Bank shares during the last 10 minutes on the maturity date (August 26, 2009) thus affecting its final price in order to avoid additional losses, which resulted in more than 25% losses to investors while corresponding profits to Deutsche Bank.
While the named plaintiffs of this case are just total of six, as this case is a securities-related class action, this final decision binds upon all the 464 investors who held the ELS until maturity except those who opted out of the case. Deutsche Bank has already deposited, right after the district court’s decision, the judgement amount with interests in the amount of 12 billion won which now stays in the court's account. Now that this case is finally resolved, the money will be distributed to the eligible class members.
The recovered amount is the total amount of damages suffered by the 464 investors (128.6% of the principal amount which was promised to receive at maturity minus the 74.94% of the principal amount which was actually paid at maturity) and interests after the due date of August 31, 2009.
This decision could be an evidence showing that U.S. styled class action system can work smoothly in Korea as well, and is expected to have positive effect upon the debated class action expansion in Korea.