Sean Hayes, foreign legal consultant with Seoul-based Ahnse Law - which is representing around 50 plaintiffs - says that the firm's key arguments will all be around mis-selling. Hayes makes a point of saying that Ahnse is not a typical plaintiffs' lawyer - the firm's clients are often foreign companies or large banks that need to defend themselves in Korea - and he himself had misgivings about the cases when Ahnse accepted them. "When I first looked at this, my general attitude was that these are private contracts and I felt it was not the kind of case that a business law firm should be taking. But then when you start to look into it and find out what was happening here, you start to get a feeling that the banks were taking advantage of people," he says.
In some cases, Hayes adds, clients were asked to sign English-language contracts, despite being unable to speak English. He recalls sitting down with one plaintiff: "He pointed at a word and asked what it meant. The word was 'buyer'. He didn't even know what 'buyer' meant."
In other cases, no contract was sent - the only documentation the client received was the trade confirmation. Some companies apparently felt that getting loans in the future was conditional on buying the kiko. Others were rushed into the decision on the basis of a quick, five-minute sales pitch. Most of the companies were too small to have a derivatives governance structure - typically, the authority to go ahead with the trade rested with one person, who was the business owner or the person looking after the company's finances, he says.
Generally speaking, Hayes says banks failed to understand their clients' needs or to fully explain the downside risk the company was taking: "A lot of people are presenting this as an arm's-length contract between a buyer and a seller. But a bank is not just a seller - more than that, they are supposed to be selling you products you need. In these cases, clients were told that the product was going to make their company safer. That's what they were sold. But it's not what they bought. What they bought was a very, very risky product.