[Exclusive] Master Fund Management CEO Profited from Non-Public Information... Financial Supervisory Service "Reported to Prosecutors"

Financial Supervisory Service "Operation Company CEO Caught for Illegitimate Profit Appropriation"
Unfair Support to Affiliates Controlled by Relatives
Strengthened Thematic Inspections on Major Shareholders' Private Interest Pursuit

#A Asset Management Company's major shareholder and CEO Mr. B received a report that a fund managed by the company was proceeding with land acquisition for real estate redevelopment purposes. Subsequently, he pre-purchased the land at a low price under the name of a related special purpose corporation and sold it to the fund at a high price, earning tens of billions of won in sales profits. In this process, to indirectly support the land purchase funds to the special purpose corporation, he improperly provided A Company's deposits as collateral for bank loans.

On the 16th, the Financial Supervisory Service (FSS) announced that its inspection results on A Asset Management Company (tentatively) found violations including the use of undisclosed insider information by major shareholder and CEO Mr. B, damage to fund interests, and improper exercise of influence. According to Asia Economy's investigation, A Asset Management Company was identified as Mastern Investment Management, and Mr. B as Mr. Kim, CEO of Mastern Investment Management. Besides being CEO, he holds key positions such as chairman of the board and chairman of the investment review committee. The FSS explained, "We discovered acts where he used his position to utilize undisclosed insider information and exert improper influence, thereby damaging the interests of the fund and the management company, while pursuing benefits for himself, his spouse, and direct descendants."

Case of Utilizing Non-public Real Estate Redevelopment Information by Asset Management Company A. Photo by Financial Supervisory Service

The FSS selected the pursuit of private interests by major shareholders as a key inspection item for asset management companies. As part of this, a thematic inspection was conducted on allegations that major shareholders and executives of the management company pursued private interests by using insider information obtained during the operation of PFVs (Project Financing Vehicles) and funds.

As a result of the inspection, CEO Kim received a report that land was needed for the redevelopment of real estate held by the company’s fund and proceeded with land acquisition. He pre-purchased the land at a low price under the name of a related special purpose corporation C and sold it at a high price to the company’s fund within a short period, earning tens of billions of won in sales profits. Furthermore, when he obtained insider information about a high-quality project during the process of receiving progress reports, he made prior and indirect investments under the name of the special purpose corporation with the intent to gain unfair profits.

Case of Utilizing Undisclosed Project Information of Asset Management Company A. Photo by Financial Supervisory Service

A Asset Management Company's Unfair Support of Affiliates through Improper Exercise of Influence. Photo by Financial Supervisory Service

Additionally, CEO Kim exercised improper influence during the joint project process between Mastern Investment Management and affiliate D (engaged in project development), which is controlled by himself, his spouse, and direct descendants, with the purpose of providing profit opportunities to affiliate D. He instructed an increase in the fees that affiliate D could receive.

The FSS stated, "We plan to take strict measures according to relevant laws and procedures regarding the illegal and improper acts of major shareholder and CEO Mr. B confirmed by the inspection results." It added, "We will actively cooperate with investigations by notifying law enforcement of illegal facts and sharing inspection results, and will continue to monitor private interest pursuits by major shareholders and executives of financial investment companies and devise measures to prevent recurrence."

Meanwhile, Mastern Investment Management has stated that it has no official position on this matter.

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