Financial Supervisory Service Completes Full Inspection of Private Equity Funds... "No Major Violations Like Lime or Optimus Found"

[Asia Economy Reporter Ji-hwan Park] In the comprehensive survey of private equity funds (PEFs) that began in July last year due to the poor private equity fund crisis, no additional cases causing large-scale investor damage like the Lime and Optimus incidents were found.

On the 6th, the Financial Supervisory Service (FSS) announced, "As a result of inspecting 9,014 professional investor-type private equity funds, no cases causing large-scale damage like the Lime and Optimus incidents were confirmed."

The comprehensive survey of private equity funds was conducted mainly through a checklist method based on document information from sales companies due to manpower limitations of the financial authorities. A total of 353 institutions, including 296 asset management companies, 67 sales companies, 18 trust companies, and 11 administrative management companies, sequentially verified the existence of managed assets according to fund asset details and whether the actual managed assets matched the investment proposals.

During this process, sales companies reported a total of 652 cases (582 funds, 6.5% of the funds subject to inspection) as requiring "in-depth inspection" to the FSS. Subsequently, the FSS received detailed documents such as trust property statements, transaction ledgers, and accounting records for these funds and conducted in-depth inspections.

The FSS stated, "No cases requiring urgent response due to large-scale damage or serious illegal acts like the Lime and Optimus incidents were identified." Although there were some cases with potential regulatory violations, considering the type, motive, and outcome, they were not judged to be matters directly causing investor damage. Additionally, on-site inspections were conducted for many related asset management companies, with sanction procedures either completed or underway, and the FSS is responding through monitoring situations such as redemption suspensions.

Furthermore, separate from the private equity fund survey, the FSS is conducting a comprehensive inspection of 233 professional private equity asset management companies. So far, inspections have been completed for 37 companies (15.9%), including those related to major redemption suspensions and those holding excessive non-marketable assets. The inspection targets include the existence of fund assets, the presence of unsound business practices, and the adequacy of internal controls and risk management.

The FSS plans to promptly initiate sanction procedures for asset management companies where violations have been found after inspections are completed. No cases of large-scale investor damage were found in the comprehensive inspection of asset management companies, and investor protection measures such as monitoring asset management companies through sales companies and trustees are ongoing.

An FSS official stated, "We plan to closely examine the possibility of other unsound business practices beyond the key inspection items of the private equity fund self-inspection." They also emphasized, "If illegal acts are revealed in the comprehensive inspection of the 233 professional private equity asset management companies, we plan to secure the soundness and restore trust in the private equity fund market through measures such as the 'ex officio deregistration system,' which was introduced for the swift removal of poorly managed companies."

This content was produced with the assistance of AI translation services.