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Shin Dong-hwan, an attorney at law firm Changcheon representing investors who suffered losses from JoongAng Group bonds, briefs reporters on the criminal complaint at a press conference held at the Seoul Bar Association building in Seocho-gu, Seoul, on Sept. 9. / Yonhap

Investors in JoongAng Group bonds have filed a criminal complaint against members of the conglomerate’s owner family, including JoongAng Holdings Chairman Hong Seok-hyun.

A joint legal team representing investors who suffered losses from JoongAng Group bonds held a press briefing at the Seoul Bar Association building in Seocho-dong, Seoul, on Sept. 9 and said it had submitted the complaint to the Seoul Southern District Prosecutors’ Office the previous day.

The complaint names 20 people, including Hong; JoongAng Group Vice Chairman Hong Jeong-do; Contentree JoongAng CEO Hong Jeong-in; current and former CEOs of affiliates including JTBC; and executives and employees of financial institutions involved in selling the bonds. They are accused of violations including breaches of the Capital Markets Act.

The complainants are 319 individual investors who purchased publicly offered unsecured bonds and electronic short-term bonds issued by JTBC and JoongAng Ilbo.

According to the legal team, JoongAng Group is a corporate group comprising 55 domestic affiliates and 24 overseas affiliates. Of the 55 domestic companies, 54 are unlisted, with Contentree JoongAng the sole listed company. The lawyers allege that the defendants repeatedly used instruments such as hybrid securities to classify liabilities as capital and engaged in so-called “round-robin financing” transactions in order to conceal the poor financial conditions of JoongAng Group and its affiliates. They argue that ordinary investors suffered financial losses after relying on financial statements that had been inflated as a result.

The legal team estimates that individual investors suffered losses of at least 32.5 billion won. It also said it had asked prosecutors to conduct the investigation directly, given that the case requires specialized financial and legal judgment.

                                                                                                          Son Seung-hyun