Financial Supervisory Service Begins Inspection of Mirae Asset Securities "Investigating Circumstances of Redemption Recommendation to Kim Sang-hee"

Background and Method of Repurchase Solicitation Inspection

The Financial Supervisory Service (FSS) will begin an inspection of Mirae Asset Securities, which recommended the redemption of Lime funds to Kim Sang-hee, a member of the Democratic Party of Korea. Kim is at the center of allegations that she received a 'preferential redemption' by withdrawing some of her investment just before Lime Asset Management declared a large-scale suspension of redemptions. Kim denies the allegations, stating that she simply applied for redemption following the advice of the selling company, Mirae Asset Securities, and that there was no preferential treatment. The FSS plans to closely examine the redemption process of investors, including Kim.

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According to the financial investment industry on the 29th, the FSS Financial Investment Inspection Bureau has been inspecting the actual conditions of Mirae Asset Securities' bond-type wrap accounts and specific money trusts since mid-month, and recently even deployed personnel from the Asset Management Inspection Bureau to the Mirae Asset Securities inspection. This is to verify whether any preferential treatment was given to certain beneficiaries during the Lime fund redemption process.

On the 24th, the FSS announced the results of a re-investigation into Lime, Optimus, and Discovery Asset Management, revealing that a multi-term member of the National Assembly received preferential redemption just before a large-scale suspension of redemptions. The FSS stated that the reason it considered this preferential treatment was that when the funds invested by the lawmaker suffered losses, Lime Asset Management used funds from other funds and the management company's proprietary funds to redeem some investors, including the lawmaker. It was later disclosed that the lawmaker in question was Kim. However, Kim immediately denied this, claiming that the redemption was made following the recommendation of Mirae Asset Securities, not based on information obtained from Lime Asset Management.

As evidence, Kim stated that not only she but also 16 investors who subscribed to the problematic fund 'Lime Martini 4' through Mirae Asset Securities all received redemptions. Mirae Asset Securities released an official statement saying, "The suspicion of preferential redemption falls within the domain of the asset management company, Lime Asset Management."

The FSS plans to investigate the background behind Mirae Asset Securities suddenly recommending redemption to the 16 subscribers of the fund (Lime Martini 4) that Kim joined, about a month before the suspension of Lime fund redemptions. They will also check whether redemption was recommended to subscribers of other Lime funds besides Lime Martini 4.

According to the FSS, in September 2019, Lime redeemed 306.9 billion KRW (223 people) from 31 of 63 open-ended funds (funds that can be redeemed before maturity). Of these 31 funds, 27 were redeemed with their own funds, but it was revealed that Lime illegally mobilized funds to redeem four funds (29 people), including Lime Martini 4.

The industry views Mirae Asset Securities' explanation as unsatisfactory because it is rare to recommend redemption simultaneously to all subscribers of Lime Martini 4. When Lime lacked funds to return investments to Lime Martini 4 subscribers, it illegally used the company's proprietary funds to meet the redemption deadline (one week after application). Whether this illegal redemption occurred without the knowledge of the selling company, Mirae Asset Securities, is expected to be a focus of the FSS inspection. Meanwhile, the FSS is also considering expanding the scope of inspections to all financial companies that sold Lime funds, depending on the situation.

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