Seo Yuseok, Chairman of the Korea Financial Investment Association, "Fund Redemption Solicitation... A Normal Role of Sales Companies"

Seo Yu-seok, chairman of the Korea Financial Investment Association, recently stated that the role of securities firms in recommending fund redemptions to customers, out of concern for limiting their losses amid the controversy over preferential redemptions in Lime Fund cases, is a "normal role."

According to the financial investment industry on the 30th, Seo met with reporters at the Korea Financial Investment Association in Yeouido the previous afternoon and responded to related questions by saying, "(Securities firms as sellers) inevitably have to be interested in the hidden risks of the products they sell, and if detected, it is appropriate to ask customers to withdraw money from the fund as a duty of a good manager."

However, when asked, "Then, do you think that Mirae Asset Securities recommending redemption of Lime Martini No. 4 to Kim Sang-hee, a member of the Democratic Party of Korea, was not preferential treatment?" he drew a line by saying, "That statement is unrelated to that incident."

Earlier, the Financial Supervisory Service announced that Lime Asset Management, just before declaring a large-scale suspension of redemptions in October 2019, used funds from other funds and the company's own funds to redeem some influential figures, including multi-term lawmakers. Subsequent reports revealed that the lawmaker was Kim.

Later, during the explanation process, lawmaker Kim announced that "Mirae Asset Securities contacted 16 people, including herself, who invested in the fund, and all were redeemed at once," drawing attention to the background of Mirae Asset Securities' redemption recommendation.

At that time, Mirae Asset Securities explained to the media through officials that the bulk redemption was carried out and denied preferential treatment, but after being pointed out by the Financial Supervisory Service for "potential distortion of facts," it issued an official position stating that "the preferential treatment suspicion is the area of Lime Asset Management, the fund manager."

Seo, who is a former president of Mirae Asset Global Investments, emphasized that the redemption recommendation is a normal business practice of securities firms, although he added the premise that it is a position separate from the recent incident.

He continued, "Securities firms have no choice but to work in a position that fulfills their duty of care," calling the redemption recommendation a "normal role."

He also stated, "A structure must be established where the three participants in the fund market?asset managers, sellers, and investors?each take responsibility for their own decision-making in their respective positions."

Regarding the moral hazard issue in the asset management industry that emerged from this incident, he self-assessed, "Awareness of internal control has increased compared to before, and the industry is advancing by hiring related professionals and establishing prevention systems."

However, he emphasized the industry's ethics by saying, "If fraudsters use the system to commit fraud, there is no way to stop it," and "Problems arising from employees' ethical issues in securities firms and asset managers must be completely eliminated by the industry itself."

Regarding the recent overheating phenomenon of 'debt investment' (borrowing to invest) in the stock market, he urged, "The stock investment pattern has changed a lot compared to the past," and "Choosing investments based solely on the stock price's 'up and down' is a wrong idea."

On the issue of converting public offering funds into exchange-traded funds (ETFs), which he has shown willingness to promote since the beginning of his tenure, he said, "We are discussing a structure with the authorities and the industry to add a separate listing class to the fund and directly list the existing fund."

Funds are classified into types such as A, B, and C depending on sales fees and commissions, even if they are the same product, and the plan is to create a new listing class.

He said, "We will conduct additional reviews on whether there are any issues with procedures or investor protection with the authorities and whether there is any discrimination between fund classes, so that we can proceed accordingly."

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