Korean firms` exposure to Wall Street fraud may reach US$100 mln

SEOUL, Dec. 15 (Yonhap) -- South Korea's financial watchdog said Monday local financial firms' exposure to an alleged multi-billion dollar fraud masterminded by a big-time U.S. financier may reach around US$100 million.
On Thursday, the U.S. Federal Bureau of Investigation arrested Bernard Madoff,
former chairman of the Nasdaq Stock Market, on charges of securities fraud in a
so-called Ponzi scheme, a pyramid-type swindle that promises early investors high
returns with money from newcomers.
Korean asset managers, insurers and the private school pension fund are likely to
suffer losses after investing in hedge funds Fairfield Sentry and Primeo Select
which entrusted Madoff's investment securities firm with billions of dollars,
according to the Financial Supervisory Service (FSS),
"Institutional investors are seeking to find ways to minimize potential losses by
checking a possibility of retrieving their investment," an official at the FSS
said.
Korea Life Insurance Co., the country's second-largest insurer, invested US$50
million directly in hedge funds while six other institutional investors,
including two pension funds, entrusted a combined $45.1 million to six local
asset managers for investment in the funds, the FSS said.
sooyeon@yna.co.kr
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