Prosecutors on Wednesday detained an executive of Lime Asset Management Co. as part of an investigation into a series of irregularities involving the country's biggest hedge fund.     

The company has been under probe over its alleged cover-up of massive losses and subsequent suspension of fund redemption worth an estimated 1.6 trillion won ($1.3 billion).

Seoul Southern District Prosecutors Office said it apprehended a company executive, identified by the surname Kim, on bribery, breach of trust and other charges. He is suspected of having played a key role in the fraud, along with the company's former chief investment officer, who went into hiding.

Prosecutors also raided the head office of Star Mobility, owned by Kim Bong-hyun, who is believed to be the main financial resource of Lime Asset.

The prosecution suspects Lime's investment, worth tens of billions of won in Star Mobility, was embezzled.

They also raided a golf course in Yongin, a city near Seoul, on suspicion that Kim may have used Star Mobility's membership in the club for illegal lobbying.

The Financial Supervisory Service (FSS) began probing Lime's suspected irregularities in July last year. The watchdog accused Lime of having concealed investment losses and inflating investment returns in a bid to keep its customer base.

In addition, the hedge fund was allegedly involved in a Ponzi scheme to cover losses, and engaged in misselling, or selling products to customers without providing adequate information or explaining the high risks involved.

The investigation has prompted spooked investors to scramble to withdraw their money. In October, the company froze withdrawals, citing an inability to liquidate enough assets to meet the redemption requests. (Yonhap)