The number of private funds in South Korea has fallen sharply over the past three months in the wake of alleged trading irregularities and a liquidity crisis at a major player, data showed Nov. 5.

The country’s privately placed funds, including private equity funds and hedge funds, totaled 11,177 as of the end of October, down 302 from three months ago, according to the data from the Korea Financial Investment Association.

October marked the third consecutive month of decline since the number reached a record high of 11,479 as of end-July.

Lime Asset Management suffered the biggest drop among asset managers over the cited period, becoming the main culprit for the overall decline.

As of end-October, Lime had 303 private funds, down 73, or 19.3 percent, from the end of July. The value of assets under its management came to some 4.5 trillion won ($3.9 billion) at the end of October, down 1.4 trillion won from three months earlier.

The company faced suspicions that it had engaged in trading irregularities to bolster fund yields. In late October, Lime Asset Management was forced to freeze withdrawals from funds worth nearly 850 billion won because it failed to liquidate assets to meet redemption requests by clients.

Industry watchers also attributed the dip in the number of private funds to investor distrust in the overall industry following misselling by local banks.

By Ram Garikipati and newswires (ram@heraldcorp.com)