Korea FSS Formally Launches Probe Into Private Funds Industry

Source: Regulation Asia Editors, Regulation Asia 2020-07-21

Any misconduct detected during the probe will be referred to prosecutors and follow-up efforts will be made to protect investors. The probe is expected to continue until 2023.

Korea’s FSS (Financial Supervisory Service) has formally launched a probe into some 10,000 private funds and 233 fund managers in the country, local media reports.

Following a decision by authorities early this month, former KRX official Kim Jeong-tae will lead a team of 30, comprising officials from the FSS, KDIC (Korea Deposit Insurance Corporation), KSD (Korea Securities Depository) and KSFC (Korea Securities Finance Corporation). Officials seconded from other institutions will receive FSS training before they are dispatched to companies to conduct investigations.

The team will first cross-check documents between the entities involved — brokerages, fund managers, trust banks and law firms — to check if the assets listed on financial statements match the records from banks and fund managers. Where red flags are raised, the investigating team will visit the private fund managers.

The initial targets will be five private fund managers identified by the FSS during its first audit from November 2019 through January in the aftermath of the Lime Asset Management scandal. At the time, the FSS looked into some 52 fund managers and 1,786 funds, including Optimus Asset Management, which has since failed to repay some KRW 900 billion (USD 747 million) in investments, is currently suspended and is under investigation for fraud.

According to the FSS, any problems or misconduct detected during the probe will be reported to prosecutors and follow-up efforts will be made to protect investors. The probe into private funds is expected to continue until 2023.

FSS

Private Funds

Korea FSS Formally Launches Probe Into Private Funds Industry

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