April 20, 2024

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[THE INVESTOR] Individual investors who suffered losses in the country’s largest stock price manipulation caused by Deutsche Bank employees in 2010, lost their case in the appellate court on May 14. 

Saying the statute of limitations has expired, the Seoul High Court reversed the original verdict that ordered Deutsche Bank Korea and Deutsche Securities Korea to pay 616 million won (US$578,424) in damages to 11 plaintiffs. 

Under civil law, the statute of limitations –- the deadline for filing a lawsuit -- involving damages expires after three years from the date the claimant becomes aware of the harm. 

The court said the plaintiffs were already aware of the damages inflicted on them around February 2011, the time when financial regulators suspended operations of Deutsche’s local units. And by the time the investors filed a damage suit against the German bank in January 2016, it was already past the deadline. 

“Considering their abundant experience in financial securities trading, the plaintiffs had the ability to recognize Deutsche Bank’s trade as illegal from early on,” said the court in a ruling.

The latest verdict is a blow to investors who were handed a victory in the lower court last year, saying the plaintiffs were not aware of the damages until January 2016, when the first criminal sentence in the case was delivered. 

DR & AJU, a Seoul-based law firm representing plaintiffs in the case, was unavailable when reached for comment. 

The case, locally referred to as “Nov. 11 Deutsche Options Shock,” dates back to 2010 when traders of two local units of Deutsche Bank sold about 2.4 trillion won worth of major stocks in the local market, triggering a 2.7 percent drop on Korea’s main KOSPI index, just 10 minutes before the stock market closing. 

The massive sell-off wiped out 28 trillion won in value from Korea’s equity market, but Deutsche Bank’s units made “illegal gains” of 44.9 billion won through derivative positions they had arranged in advance. 

In January 2016, the court delivered the first sentence in the case, levying a 1.5 billion won in fine on Deutsche Bank’s Korean operations and sentenced an employee, surnamed Park, to five years in prison.

By Ahn Sung-mi (sahn@heraldcorp.com)