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[Alpha Biz=(Chicago) Reporter Paul Lee] Kyowon Group will file a lawsuit against Meritz Securities. The loss came as hundreds of billions of won was made from funds related to U.S. gas field investment projects arranged by Meritz Securities. Following Lotte Insurance and KDB Life Insurance, Kyowon Group participated in the lawsuit, and a lawsuit against Meritz Securities seems to be spreading.
According to the financial sector on the 15th, Kyowon Life and Kyowon Investment have set up a policy to file a lawsuit against Meritz Securities.
"The loss occurred because Meritz Securities did not fully explain the risk of investing in gas fields in the U.S.," a Kyowon Group official said. "We plan to file a lawsuit this month."
Kyowon Group suffered a heavy loss after participating in the investment in Frontera Gas Combined Thermal Power Plant in Texas, USA, which was arranged by Meritz Securities. At the recommendation of Meritz Securities in 2018, Lotte Insurance, KDB Life Insurance, Korea Exchange, Teachers' Life, Teachers' Best, and Teachers' Credit Union have invested. The fund is worth $ 160 million (about 201.2 billion won). Lotte Insurance and KDB Life Insurance have invested $ 50 million and $ 30 million, respectively. The investment of Kyowon Life and Kyowon Investment is $ 5 million each.
The Frontera gas power plant business suffered losses as it was hit by COVID-19. Mexico is a major power distributor, and the COVID-19 has caused a sharp drop in demand for electricity in the region. In the end, the gas plant went through a rehabilitation process, and the fund was completely lost in August 2021.
On the other hand, Meritz Securities countered by saying, "We provided sufficient explanations through briefing sessions before the actual investment was made," and that "the legal due diligence report and investment briefing material distributed in advance also included detailed explanations related to collateral."
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
