Jang Ha-won, the former head of Discovery Asset Management, has been sentenced to 2 years in prison and 3 years of probation in the first trial for selling a fund that was known to be unprofitable, deceiving investors. Jang is the younger brother of Jang Ha-sung, who served as the ambassador to China during the Moon Jae-in administration.
On the 29th, the 15th Criminal Division of the Southern District Court of Seoul (presided over by Yang Hwan-seung) sentenced Jang to 2 years in prison and 3 years of probation, as well as a fine of 1.6 billion won for violating the Capital Markets Act and for specific economic crimes.
Jang is accused of raising approximately 109 billion won while concealing information related to bad debts and collateral losses in the fund managed by the company from August 2018 to April 2019.
He is also accused of operating the fund without formal registration and of obtaining shares in a development company in exchange for lending 10.9 billion won to the rental housing project of the Seoul Housing and Urban Improvement Corporation (SH).
The court stated, “The defendant had the duty to accurately inform investors of the risks associated with the fund products to induce sound judgment and protect them, yet he omitted and falsely recorded key information that could influence investment decisions, depriving investors of reasonable investment opportunities.” It added, “The revenue acquired by Discovery from this crime is not insignificant.”
The court further noted, “Despite being an executive of a financial investment firm that should strive for the fairness and reliability of the capital market, the defendant used his position to acquire company shares and sought personal gain,” adding, “The nature of the crime is not light.” It continued, “There is a high possibility of condemnation as it raises concerns about disrupting the healthy economic order.”
Jang was previously indicted in July 2022 for concealing the fund's poor performance and raising about 134.8 billion won in investment funds. However, this case was ruled not guilty by the Supreme Court in January.