Financial Supervisory Service to Announce Interim Results of Private Fund Managers Survey Next Week

Investigation at 9 Sites Reveals No Major Issues Detected

[Asia Economy Reporter Ji-hwan Park] The Financial Supervisory Service (FSS) will announce the interim results of the comprehensive survey on domestic private equity fund management companies next week. This comes about four months after the official launch of the "Dedicated Inspection Team for Professional Private Equity Fund Managers" at the end of July. According to the investigation results so far, no major issues that could cause large-scale social controversies, such as those involving Lime and Optimus Asset Management, have been found.

According to the financial investment industry on the 19th, the FSS plans to announce the interim results of the comprehensive survey on private equity fund managers next week. The dedicated inspection team, launched on July 20, has completed investigations on nine domestic professional private equity fund managers to date. During the investigation process so far, it has been reported that there is no possibility of additional large-scale fund insolvencies similar to Lime and Optimus. The interim results announcement is expected to introduce major cases focusing on issues found in the investigations of the nine companies. An FSS official explained, "So far, during the comprehensive survey of private equity fund managers, no fraudulent or socially significant issues like the Lime and Optimus incidents have been discovered." However, some notable problems in fund management have been found in individual companies.

The FSS's comprehensive survey of private equity fund managers is being conducted to verify whether the fund investment money was used for its intended purposes, whether it was used as capital for corporate raiders' no-capital mergers and acquisitions (M&A), and whether there is a possibility of additional redemption delays due to maturity mismatches between funds and incorporated assets, issues revealed by the recent series of large-scale private equity fund redemption suspensions. The FSS plans to closely cooperate with related agencies such as the prosecution if illegal activities or embezzlement and breach of trust of fund assets are uncovered in future inspection results.

The FSS also plans to formally incorporate the dedicated inspection team for private equity fund managers into its organizational structure during the year-end reorganization. Since it plans to complete a comprehensive survey of 234 fund management companies by 2023, it aims to conduct 60 inspections annually. The inspection team will continue to operate as a temporary organization for at least three more years due to difficulties in securing budgets and managing the organization, making the establishment of a permanent comprehensive survey organization necessary. Currently, the dedicated inspection team operates as a temporary organization composed of about 30 members, including 18 FSS employees and 12 employees from related institutions such as the Korea Deposit Insurance Corporation.

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