A local court on Thursday dismissed a damage suit filed against the government by investors who were deceived into buying fraudulent debt products.
  

The Seoul Central District Court dismissed the suit filed by a total of 364 Tongyang investors seeking 1 million won ($920) each in compensation from the Financial Supervisory Service and the government.
  

The plaintiffs claim the agency failed to take proper action despite its knowledge of the dubious nature of debt products sold by Tongyang Securities Co.
  

Last year, the head of Tongyang Group was found guilty of ordering the group's affiliates to issue 1.3 trillion won worth of bonds and commercial papers between February and September 2013 even though he knew the companies would not be able to pay off their debts.
  

More than 40,000 individual investors are estimated to have lost their investment money.
  

However, the court said the FSS submitted reports on Tongyang to the Financial Services Commission and sent an official document to the firm to strengthen internal control procedures, rejecting the plaintiff's claim that the agency was negligent of its duty.
  

Tongyang Securities was sold to Taiwanese brokerage house Yuanta Securities in June 2014. (Yonhap)