Mirae Asset Securities headquarters in downtown Seoul / Courtesy of Mirae Asset Securities

An employee of Mirae Asset Securities was found to have forged a convertible loan agreement (CLA) worth $210 million without approval from the securities firm's official investment committee, leaving the company vulnerable to potential damages in global legal disputes.

According to the investment banking industry, Mirae Asset Securities discovered through an internal audit that the executive employee of the firm's alternative investment division had forged the 30-page loan agreement and provided it to a U.S.-based renewable energy company in January 2021, promising to fund $210 million for the construction of a renewable diesel facility in Las Vegas, Nevada.

The January 2021 loan agreement, however, was never realized since. The employee attempted to renegotiate the terms of the deal, only to unilaterally terminate it later.

The case became known to the industry once Ryze Renewables Nevada LLC, the counterparty of the forged agreement, sought international arbitration against Mirae Asset during the first half of this year, in order to recover damages resulting from the unimplemented loan deal. Ryze cited Mirae's failure to comply with the agreement calling it a material breach, an abuse of process, a misrepresentation and carried out in bad faith.

Mirae Asset claimed that the loan agreement was a unilaterally fabricated false agreement resulting from the individual employee's misconduct, explaining that the document with the signature and seal of an unauthorized manager-level employee is legally invalid.

Once Mirae Asset Securities confirmed in June the misconduct by the employee, who failed at following proper procedures for the CLA process, the securities firm fired the employee and reported the incident to the prosecution.

"The key to the case is that an unauthorized action was taken by an employee without following the firm's proper internal procedures. When the company became aware of the situation, it conducted an internal audit in accordance with our internal control systems," an official from Mirae Asset Securities explained.

Still, it comes as a shocking revelation that the investment banking division of Korea's top-ranked securities investment firm in terms of equity capital has failed at effectively controlling its legal contract process, before such falsified legal documents were sent to counterparties of an investment deal.