Deutsche Bank indictment set to spur fresh lawsuits

By Lee Minji
SEOUL, Aug. 23 (Yonhap) -- The recent indictment of four employees at Deutsche Bank AG and its South Korean brokerage is expected to trigger a spate of lawsuits requesting compensation on losses caused by the German financial group's alleged stock manipulation, market watchers said Tuesday.
The Seoul Central District Prosecutors' Office on Sunday indicted three foreign employees and one South Korean employee at Deutsche Securities Korea on allegations of stock manipulations that prompted the main stock index to plunge 2.7 percent on Nov. 11.
Prosecution officials said they believe that employees of the German investment bank gave orders to the Seoul unit to place massive sell orders in the closing minutes of trading on that day, the expiry date of stock index options, adding the indictment was based strictly on evidence since the foreign employees refused to answer a subpoena issued in April.
Market watchers said the indictment is likely to give a boost to the ongoing civil suits as well as prompt fresh litigation.
"The trials have been slow, but we believe the civil trial is likely to get a boost if the criminal trial gets moving," said an attorney at Law Group Min Ju, which represents 19 retail investors who filed a lawsuit against the German investment bank in May. The investors may consider further raising the claim damages, the attorney added.
Institutional investors who suffered losses from the Nov. 11 plunge also welcomed the legal move as a stepping stone to winning compensation.
"The indictment is definitely a positive factor. We plan to raise the current 1 billion won claim if we win the case," said Soh Byung-wook, a lawyer who represents Wise Asset Management Co., a Seoul-based asset management firm which experienced losses worth 89.8 billion won from the Nov. 11 fall.
Industry officials said the recent indictment is likely to prompt other investors to file new lawsuits against Deutsche Bank and its brokerage unit.
"So far, there hasn't been an actual rise in the number of investors filing claims on the stock manipulation case. But following the indictment, a growing number of people may start filing claims on bigger chances of winning the lawsuits," said an industry official.
However, some said new lawsuits are unlikely in the short term as investors may first decide to keep tabs on how the ongoing criminal case develops.
"There may be additional claims raised. But considering the high legal costs and the fact that the Deutsche Bank case has already been extensively covered by the media, a sudden rise in related lawsuits seems unlikely," said another industry official, adding that investors would probably take a wait-and-see approach before taking legal action.
Nonetheless, market watchers said the indictment is likely to raise awareness on unjust stock trading and act as a symbolic move in heightening punishments on illegal moves.
"The Korea Exchange imposed the highest amount of penalty possible to Deutsche Securities Korea. Despite the move, many had raised doubts about the effectiveness of the punishment," said Ahn Dong-hyun, a professor at Seoul National University.
"The indictment mirrors their opinion and could further act as a catalyst in curbing institutional investors' unjust actions in the local stock market," Ahn said.
mil@yna.co.kr