Hyundai Family 15.1 billion won lawsuit… 2nd trial: “Hyundai Motor Securities pays 9 billion won in compensation to Chung Mong-koo Foundation”

(Seoul = Yonhap News) Reporter Lee Bal-eum = The court's ruling that Hyundai Motor Securities should compensate approximately 9 billion won to the Chung Mong-koo Foundation, which suffered a loss worth 15 billion won through investment in a resort in Las Vegas, was upheld in the appeals court.

According to the legal community on the 20th, Civil Division 14-1 of the Seoul High Court (Judges Nam Yang-woo, Hong Seong-wook, and Park Jae-woo) dismissed both sides' appeals and upheld the plaintiff's ruling in the appeal trial of the damages claim filed by the Chung Mong-koo Foundation against Hyundai Motor Securities on the 15th.

Hyundai Motor Securities signed a discretionary investment agreement with the Chung Mong-koo Foundation and, while managing the foundation's funds, recommended investing in a fund related to the complex resort development project in Las Vegas, USA in 2018.

The Chung Mong-koo Foundation accepted this and invested approximately 15.877 billion won, but later suffered a loss of 15.19 billion won as construction was halted due to the spread of COVID-19.

The Chung Mong-koo Foundation filed a lawsuit in 2021, claiming that Hyundai Motor Securities violated its duty of care by failing to notify it of the possibility of loss during the investment recommendation process.

On the other hand, Hyundai Motor Securities claimed that the Chung Mong-koo Foundation also had experience investing in alternative real estate investment products, so it was aware of the meaning of investment at the time and explained all investment risk factors to the extent it could understand.

The first trial ruled that Hyundai Motor Securities had no intention to deceive the Chung Mong-koo Foundation, but did not sufficiently explain the investment risks and the possibility of recovering the investment, and ordered the Chung Mong-koo Foundation to compensate KRW 9.0654 billion, equivalent to 60% of the loss.

The second trial also dismissed the appeal, saying that Hyundai Motor Securities' investment proposal stated that "even in the worst case, there will be no problem in recovering the principal when disposing of collateral," and that "it should have been sufficiently explained that the possibility of recovering the investment would be low if the development project fails, but there is no data to support that this was explained in a way that the plaintiff, an ordinary investor, could understand."