Individual investors who lost money on JoongAng Group affiliate bonds demanded on 13th that the Financial Supervisory Service (FSS) inspect the full issuance, distribution, and sales process of JTBC corporate bonds and electronic short-term bonds. The legal team representing victims of JoongAng Group bond investments held a briefing in Seoul and submitted on 10th a petition to the FSS on behalf of 250 victims with losses totaling approximately 32.52 billion won. The victims allege that JTBC issued 93 billion won in unsecured public bonds in February but defaulted approximately four months later on 20.6 billion won in short-term debt, triggering rehabilitation proceedings and acceleration of 245 billion won in total public bonds. The legal team claims JTBC was in a state of effective full capital erosion at the time of issuance — with equity of 19 billion won but net equity of negative 135.4 billion won after excluding 154.4 billion won in hybrid capital securities classified as equity — and argues that financial firms failed to filter out the issuer's insolvency and adequately disclose risks to individual investors.
250 Victims Report 32.52 Billion Won in JTBC Bond Losses
The legal team submitted on 10th a petition representing 250 victims with losses of approximately 32.52 billion won. Exchange-traded corporate bond investors accounted for 211 victims and 23.52 billion won in losses, discretionary investment mandate inclusion accounted for 29 victims and 5.55 billion won, and electronic short-term bond investments accounted for 10 victims and 3.45 billion won. The legal team's internal tally shows approximately 450 individual accounts and investment amounts totaling approximately 76 billion won. Victim registration is ongoing.
Legal Team Alleges JTBC Issued Bonds in Capital Erosion State
The legal team argued that JTBC was in a state of effective full capital erosion at the time of corporate bond issuance. Total equity as of the end of 2025 was 19 billion won, but after excluding 154.4 billion won in hybrid capital securities classified as equity, net equity reached negative 135.4 billion won. JTBC issued 93 billion won in unsecured public bonds in February but failed to repay 20.6 billion won in short-term debt related to electronic short-term bonds approximately four months later. The company subsequently applied for rehabilitation proceedings, and acceleration of the entire 245 billion won in public bonds was disclosed.
Victims Demand Investigation of Shinhan Investment Securities' Due Diligence
The legal team demanded an investigation into why Shinhan Investment Securities, the lead underwriter, included risks such as capital erosion, accumulated deficits, and short-term borrowings in its corporate due diligence report but stated in the investment prospectus that "repayment of principal and interest will be smooth." The team also questioned why the underwriter cited affiliate support potential as grounds for repayment feasibility when credit rating agencies did not reflect such potential, and why the issuance amount was increased to 93 billion won despite demand forecasting participation of only 77 billion won. Lawyer Lee Bok-hyun stated, "The intent of related precedents is that if meaningful information affecting investment judgment becomes known after underwriting, it must be disclosed to the market in an appropriate manner. The FSS must inspect whether Shinhan Investment Securities knew or could have known that the volume would be passed to individuals."
Legal Team Claims Inadequate Risk Disclosure in Bond Distribution and Sales
The legal team argued that risk disclosure was not properly carried out during the distribution and sales process. The team stated that even after capital erosion was disclosed, securities firm applications emphasized the 8% coupon rate without separate warnings, and approximately 440 million won in bonds were traded the day before default. Regarding Kiwoom Securities, the team claimed to have secured recordings of sales representatives instructing customers to register for happy call refusal during the electronic short-term bond sales process.
Victims Describe Losses as Life Savings and Retirement Funds
Victims appealed that they are not speculators chasing high interest rates but ordinary individuals trying to secure living expenses and retirement funds. Victim Shin stated, "My father trusted the broadcaster's name and introduced the bonds to family members. If he had thought it was a risky matter, he would never have recommended it. The investment prospectus I carefully reviewed stated 'repayment of principal and interest will be smooth.' Please thoroughly investigate whether financial institutions fulfilled their duty to explain." Victim Ahn, age 64, who works as a day laborer, stated that he purchased the bonds to supplement his living expenses with 360,000 won in monthly interest. He appealed, "People say 'it's your fault for investing in high interest rates,' but I thought a broadcasting station that reports news every day could be trusted. It was a choice I made just to survive. This money is like my life."
Legal Team Requests Expanded FSS Inspection and Data Preservation
The legal team emphasized that the scope of inspection must be expanded beyond Shinhan Investment Securities and Kiwoom Securities to include Hanyang Securities (electronic short-term bond underwriter), discretionary investment firms, exchange brokerage securities firms, and credit rating agencies, and that related materials must be immediately preserved. Lawyer Lee stated, "We will hold financial companies accountable for why they did not know about risks that ordinary people could confirm through disclosure materials, or why they did not inform the market even if they knew. If necessary, we will request FSS investigation into problems with JoongAng Group's fund management or proceed with other criminal procedures."
FAQ
What did JTBC bond victims demand on 13th?
Individual investors who lost money on JoongAng Group affiliate bonds demanded on 13th that the Financial Supervisory Service inspect the full issuance, distribution, and sales process of JTBC corporate bonds and electronic short-term bonds. The legal team submitted on 10th a petition representing 250 victims with losses totaling approximately 32.52 billion won.
Why did JTBC bonds default approximately four months after issuance?
JTBC issued 93 billion won in unsecured public bonds in February but failed to repay 20.6 billion won in short-term debt approximately four months later. The legal team claims JTBC was in a state of effective full capital erosion at issuance, with net equity of negative 135.4 billion won after excluding hybrid capital securities, and that financial firms failed to adequately disclose risks to individual investors.
What allegations did victims make against Shinhan Investment Securities?
Victims demanded an investigation into why Shinhan Investment Securities included risks such as capital erosion and accumulated deficits in its due diligence report but stated in the investment prospectus that "repayment of principal and interest will be smooth." The legal team also questioned why the underwriter increased the issuance amount to 93 billion won despite demand forecasting participation of only 77 billion won.
