Tongyang’s fall has far-reaching effectMrs. Lee had been saving money all her life to care for and support her severely disabled daughter - only to have those savings vanish.
She spent the past 17 years working, barely resting a single day, saving up and investing the bulk of the money - 2.9 billion won ($2.7 million) - into commercial paper (CP) from Tongyang Securities. She had been persuaded to buy CP from the company but was never fully informed of the firm’s struggling financial status.
“By believing the lies a Tongyang Securities employee told me, the 2.9 billion won I invested is all gone,” lamented Lee, one of 49,000 people who bought corporate bonds and commercial paper released by the debt-ridden Tongyang Group, an affiliate of Tongyang Securities.
Five Tongyang affiliates - Tongyang Inc., Tongyang Leisure, Tongyang International, Tongyang Cement and Energy and Tongyang Networks - filed for court receiverships on Sept. 30 and Oct. 1.
The thousands of people who purchased commercial paper and bonds from Tongyang, the nation’s 38th-largest conglomerate, are now on the brink of losing an estimated total of 2.3 trillion won. Mrs. Lee is just the first plaintiff to file a suit against Tongyang Securities for damages.
Early on, she knew she had to find a way to support her 20-year-old daughter - who was born with a congenital heart defect - physically, as well as financially.
She wouldn’t be around forever, and she wanted her daughter to have all she needed.
They emigrated to Canada in 1996. Mrs. Lee hoped the advanced medical technologies there would help her daughter’s condition, which barely improved after seven surgeries.
She began her search for smart investments and eventually came into contact with an employee of Tongyang Securities, surnamed Bae.
“This is money that my disabled daughter will use later,” Lee told Bae, “so no matter what, the principal has to be guaranteed.”
Bae continued to attest to Tongyang Securities’ credibility.
Out of 49,000 Tongyang’s investors, Lee invested the largest sum.
She filed a suit with the Seoul Central District Prosecutors’ Office and is currently requesting 200 million won. Though Lee’s attorney says his client has “a right to full compensation.”
The Financial Consumer Agency yesterday said that it is currently gathering plaintiffs to file a class-action lawsuit against Tongyang Securities.
BY PARK MIN-JE AND SARAH KIM [email@example.com]