Lee Bok-hyun "Asset managers repeatedly make fund price errors... Concerns over investor trust damage"

FSS Holds Meeting with Asset Management CEOs
Amid Intensifying Competition Among Firms...
"Comprehensive Review of Management Systems"

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), stated on the 10th, "Errors are repeatedly occurring in the calculation of fund prices (NAV), which is fundamental to fund management," and pointed out, "This fundamentally undermines investor trust."

Yonhap News

At the 'Asset Management Company CEO Meeting' held at the Korea Financial Investment Association in Yeouido, Seoul, Governor Lee said, "For asset management companies that focus only on noise marketing and neglect their core responsibilities, we plan to review the entire fund management system to protect trust in the fund market."

Regarding the recent overheating competition among asset management companies, the FSS has announced plans to establish comprehensive measures to maintain market order. He emphasized, "Recently, competition to lower fees for external growth has been intensifying, especially among some large firms," and added, "Asset management companies themselves should also reestablish work principles and internal discipline to meet investors' trust."

He also requested asset management companies to fulfill their fiduciary duties and focus on their core tasks. Governor Lee pointed out, "Under the Capital Markets Act, asset management companies are explicitly assigned a 'duty of loyalty' to investors. However, cases that undermine the principle of putting investors first?such as formalistic voting, pursuit of private interests by major shareholders and executives, and decision-making biased toward affiliates and other stakeholders?occur frequently."

Asset management companies have long been criticized as 'rubber stamps' due to low voting participation at shareholders' meetings. In response, Governor Lee emphasized, "The FSS plans to clearly disclose necessary information so that the market can identify diligent trustees by naming and shaming exemplary and inadequate cases of voting."

He urged efforts to enhance 'expertise' and 'creativity' to improve management capabilities. He said, "The asset management market is already a global competitive arena beyond borders," and added, "Although Korea is striving to expand product diversity, it is still insufficient to showcase the 'unique appeal of the Korean market.' Now, a differentiated 'K-Management' strategy that can succeed in the global market is urgently needed."

Finally, Governor Lee stated, "Our capital market is currently facing a 'precarious crisis' due to chronic stock undervaluation, concerns over corporate earnings slowdown, and global tariff wars," and requested, "The asset management industry should support the growth of innovative companies with cutting-edge technology in the era of longevity and serve as a core infrastructure of the capital market responsible for the public’s retirement. Please prioritize the invisible value of trust over immediate numbers."

This meeting was held as part of two-way communication to discuss the advancement of the capital market and the sound development of the asset management industry, as well as to listen to industry suggestions.

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