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| Financial Supervisory Service Governor Lee Bok-hyun, left, enters the regulatory agency's headquarters in Seoul, Wednesday. Yonhap |
New FSS chief hints at reinvestigating Lime, Optimus cases
By Lee Min-hyung
Securities firms could end up in the hot seat after the country's regulatory watchdog hinted at re-launching a probe into the misselling of problematic fund products managed by Lime Asset Management and Optimus Asset Management.
Major brokerage houses here, including NH Investment & Securities and KB Securities, were slapped with sanctions by the Financial Supervisory Service (FSS) last year for their mishandled sale of the risky fund products.
But with new FSS Governor Lee Bok-hyun taking office on Tuesday, the prosecutor-turned-governor hinted at the possibility of reinvestigating the fund fiasco.
"The watchdog will look into whether we have to launch a probe into the case again, as some raise problems (regarding the need to do so)," Lee said Wednesday.
Officials from the FSS were unavailable to comment on further details. In general, the authority does not reinvestigate specific financial scandals after a probe has been completed, but there are no restrictions on reinvestigations.
As Lee is the nation's first prosecutor-turned-FSS governor, the securities industry expressed concerns over the escalating likelihood of being reinvestigated by the watchdog.
"The FSS' investigative authority is expected to grow bigger under the administration of President Yoon Suk-yeol, so the industry does not rule out the possibility of going through a reinvestigation by the watchdog," an industry source said.
Even if the FSS already imposed sanctions on companies that were involved in the incident last year, major brokerage houses have to stay on their toes with the former prosecutor-led FSS, according to the source.
Another official from the financial circle, however, said that it might be tough for the FSS to reopen the case.
"It still remains to be seen whether the FSS will launch an all-out reinvestigation, as this goes against the deregulatory stance of the Yoon administration," the official said.
"We expect the FSS to maintain the supervisory role, while at the same time focusing more on pursuing market stabilization and fair competition here, as the overall stance of President Yoon and his economic team is to deregulate a series of tight regulations across all industry sectors," the source said.
On Wednesday, Discovery Asset Management CEO Jang Ha-won was arrested on charges of selling fraudulent funds between 2017 and 2019. These fraudulent funds caused 250 billion won in losses to victims. Ha-won is a younger brother of former presidential policy chief and Ambassador to China Jang Ha-sung.
As Jang Ha-sung and a group of high-ranking political figures of the former Moon Jae-in administration had invested in the funds, police are considering summoning them for questioning. Under the scenario, there is a chance that the FSS and investigative authorities may launch additional investigations into the funds' sellers, such as the Korea Investment & Securities, the Industrial Bank of Korea and Hana Bank, even if no specifics have been confirmed for the time being.
Last month, the prosecution reinstated the Financial and Securities Crime Joint Investigation Team to enhance supervision and investigations into major financial crimes here.
The team is widely expected to join hands with the FSS, so both authorities can carry out more systemic and timely investigations into any financial scandal.
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