“Private equity survey conducted by 50% of the total, targeting completion by the first quarter of next year”
“Korea’s financial weakness… sellers raise consumer protection backside and sales fever”
“Regrettable involvement of employees, discussion of recurrence prevention measures” … dismisses’transfer of responsibility’
[서울파이낸스 남궁영진 기자] Financial Supervisory Governor Yoon Seok-heon said, “We are targeting 20 managers by the end of the year, and we plan to announce the details so far this week.”
Director Yoon said, “In private management company field inspections, some managers’ private interests, OEMs (operated by seller’s instructions), and predatory financial cases were discovered.” He added, “We are urging related organizations to cooperate with the goal of completion by the first quarter of next year.”
Director Yoon stressed that he would apologize as a financial supervisor in the case of large-scale private equity such as Lime and Optimus Asset Management, and that he would focus on consumer protection to prevent similar accidents from recurring.
Director Yoon made such a statement at the farewell conference held online on the 23rd. First of all, he cited the response to the novel coronavirus infection (Corona 19) and the private equity crisis as the most memorable issues this year.
He said, “The private equity crisis condensedly showed the weak side of Korean finance even though the market grew significantly due to deregulation. Internal controls were not working in the process of designing, manufacturing, and selling financial products, and there were some frauds.” Pointed out.
Then, “Sellers such as securities and banks have been fiercely engaged in sales competition while protecting consumers from behind the scenes.” “Consumers suffered a great deal in the process of selling private equity funds through the counter, and as a financial supervisor, I feel very regrettable.” “He said.
Director Yoon said, “Corona 19 has had a big impact on the financial supervision work,” he said. “Although real companies and self-employed people suffered great difficulties, they were very lacking in support efforts with financial companies in the process.” He added, “The one that directly affected Corona 19 was the untact method during the on-site inspection or the comprehensive inspection, and it greatly affected the way the inspection was performed.”
In connection with the on-site inspection of private equity firms, Director Yoon said that some managers’ private interests, OEMs (operated by seller’s instructions), and predatory finance cases were discovered. This is the result of an inspection of 18 out of 233 private equity management companies by the Financial Supervisory Service’s specialized private management company inspection team.
He explained, “We are targeting 20 managers by the end of the year, and the details so far will be announced separately during this week,” he explained. “However, this case is not about the extent of large-scale damage such as Lime or Optimus.” He added, “About 50% of the total inspection of 9043 private equity funds has been completed, and we are urging related organizations to cooperate with the goal of completion by the first quarter of next year.”
Regarding the dispute settlement on the Optimus Asset Management Fund, which is scheduled to be held in February of next year, the Sanctions Deliberation Committee has not yet obtained an answer, but announced that it will conclude by organizing legal review and confirmation of facts as soon as possible.
Director Yoon said, “If it is difficult to settle disputes through’contract cancellation’ like the Lime Trade Finance Fund, it can lead to incomplete sales. In this case, there is a question whether it is possible to settle disputes in situations where damage is not estimated. If there is an agreement between the seller and the investor, we will open a subcommittee based on that and make recommendations.”
Director Yoon also said, “We are very sorry” for the fact that the FSS staff was involved in the Lime-Optimus incident, and that we are preparing measures to prevent recurrence.
He said, “The situation in which two employees were involved in the private equity crisis made me think that it was necessary to look back internally by the Financial Supervisory Service.” There is also a discussion to come up with preventive measures,” he explained.
At the same time, a line was drawn about the’transfer of responsibility for financial companies’ raised by some. Director Yoon said, “The FSS’s sanctions against financial companies are for the fact that they haven’t played a proper role on consumers,” he said.
Director Yoon also commented on the fact that the stock market is showing an all-time strong this year. He argued that in a situation where money flows into the stock market, it is necessary to induce long-term investment.
He said, “A lot of lost money flowed into the stock market, and it looks unstable in some way,” he said. “Historically, when looking at 100 years, the stock price will definitely rise, but in the short term, it may plunge due to the financial crisis.”
“In this process, we will continue to analyze and monitor potential factors related to the stock market, while continuing our efforts to protect investors from illegal and unhealthy activities.”
Director Yoon said, “I think tax benefits for long-term investment and supplementation of ISA (Individual Comprehensive Asset Management Account) are a good way to go nationally. It provides an incentive to invest in stocks for a long time, and the pension system is weakening. I hope to make it up.”
Copyright © Seoul Finance Unauthorized reproduction and redistribution prohibited