[Exclusive] "Asset Management to Be Supervised Like Securities and Banks"... Financial Authorities Conduct Spot Inspections on JB Asset Management

"Asset Management Supervised by Same Standards as Securities and Banks"
Reconsidering JB Asset Management's Real Estate Funds
Regulatory Compliance Supervision After Lime and Optimus Incidents
Inspections of Asset Management Firms Begin with Samsung Asset Management

Financial Supervisory Service (Photo by Yonhap News)

[Asia Economy Reporter Hwang Yoon-joo] The Financial Supervisory Service (FSS) is scrutinizing whether asset management companies and securities firms are properly adhering to investor protection regulations. Following inspections on Exchange-Traded Funds (ETFs), the FSS has expanded its examinations to cover concurrent and joint business reporting, real estate funds, and other areas.

According to the financial investment industry and authorities on the 27th, the FSS Asset Management Inspection Bureau has dispatched staff to JB Asset Management to conduct ad-hoc inspections. These inspections occur when specific issues arise. The inspection is expected to conclude in the first week of June.

The FSS is reportedly re-examining the real estate funds of JB Asset Management, which were previously inspected on-site in 2020. Earlier, JB Asset Management faced redemption suspensions in the ‘JB Australia NDIS’ sold by KB Securities and the ‘JB UK Rooftop Specialized Private Investment Trust No.1 (UK Rooftop Fund)’ sold by Hana Bank. Problems arose when it was revealed that both funds invested in assets different from their original design, causing difficulties in maturity repayments. As a result, JB Asset Management is currently engaged in legal disputes with institutional investors and distributors.

In the second half of the year, inspections are expected to continue not only for large asset management companies but also for small and medium-sized firms. Earlier this month, the FSS announced plans to focus inspections this year on securities firms and asset management companies that have suspended private fund redemptions. This is to ensure compliance with investor protection regulations following the Lime and Optimus scandals related to general private funds.

In February this year, the FSS restructured its inspection system by dividing comprehensive and sector inspections into regular and ad-hoc inspections. The first asset management company to be inspected under the new system was Samsung Asset Management. Initially, the FSS planned to focus on crude oil-related ETFs, but since litigation was ongoing at the time the inspection began, the entire ETF sector was reviewed. Samsung Asset Management holds the number one market share in the domestic ETF market and competes fiercely with Mirae Asset Management, which ranks second.

An industry insider said, "Financial authorities had not previously conducted focused inspections on asset management companies. However, following the private fund issues, they announced plans to conduct regular and ad-hoc inspections on asset management firms under the same standards as securities firms and banks." An FSS official stated, "We will not comment on matters currently under inspection."

Meanwhile, the first regular inspection target among securities firms this year is Kiwoom Securities. Kiwoom Securities is currently undergoing a preliminary inspection ahead of the regular inspection, which will begin in June.

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