LS Securities faces a 7.01867 billion won lawsuit filed by foreign investor A at Seoul Southern District Court on the 15th of last month over fraudulent stock sale orders. The investor claims LS Securities executed unauthorized orders from a third party impersonating A via email from July 2025 to February 2026, resulting in asset sales and remittances totaling approximately $3.33 million without proper identity verification. LS Securities acted as standing proxy for the foreign investor, a role that handles investment registration, account opening, and transaction processing for overseas residents trading Korean stocks. The dispute centers on whether the securities firm fulfilled its obligation to verify the authenticity of email orders when the sender's address differed from the registered contact information.
Parties Dispute Email Verification and Remittance Procedures
Investor A claims the fraudulent orders originated from an email address with a similar but different domain from the address registered in the standing proxy contract. According to A, LS Securities failed to verify identity through the registered email or phone before executing the orders. LS Securities stated it responded to emails arriving under A's name, with replies actually sent to the similar address, and judged them as the same person based on included previous order history and address similarity.
Both parties agree hacking occurred but dispute whose system was compromised. LS Securities stated that a Financial Security Institute inspection found no evidence the company's system or email was hacked. Investor A's side claims the fraudster hacked an LS Securities employee's email account to obtain existing correspondence, then used this information to create impersonating emails.
Regarding the remittance process, LS Securities sent approximately $3.33 million (about 4.9 billion won) in 19 transactions to accounts in the US and Vietnam based on email orders. Investor A's side claims the fraudster exploited the fact that US and Vietnamese systems allow remittances when recipient names differ from actual account holders. The remittance instruction forms listed A as recipient but used account numbers controlled by a third party. LS Securities explained it judged the transactions as legitimate based on submitted remittance instruction forms and related documents, noting the standing proxy contract does not require pre-registered account designation and contains no separate customer account information.
LS Securities Reports Incident to Authorities, Declines Immediate Restoration
After the issue emerged, investor A demanded restoration of the unauthorized stock sales and remitted assets, which LS Securities declined. LS Securities stated it "did not refuse to return the assets, but will fulfill its responsibilities once objective liability is clearly confirmed through a court judgment."
LS Securities reported the financial incident to the Financial Supervisory Service in February 2026 immediately after the incident occurred. The firm filed a criminal complaint with police in early March, stating it will do its best to investigate the truth as this is a third-party criminal case.
FAQ
What did the foreign investor claim in the lawsuit against LS Securities?
Foreign investor A filed a 7.01867 billion won lawsuit at Seoul Southern District Court on the 15th of last month, claiming LS Securities executed unauthorized stock sale and remittance orders from a third party impersonating A via email from July 2025 to February 2026 without proper identity verification.
How much money was remitted through the fraudulent orders?
LS Securities sent approximately $3.33 million (about 4.9 billion won) in 19 transactions to accounts in the US and Vietnam based on the fraudulent email orders.
