Lee Chan-jin, governor of the Financial Supervisory Service, stressed that in expanding the Financial Supervisory Service's special judicial police (special investigators), the key is to give the capital markets special investigators the authority to open investigations on their own and to reach conclusions within 48 hours. The FSS special investigators are currently subject to the control of the investigation review committee within the Financial Services Commission's Securities and Futures Commission.
At a work plan briefing held at the Financial Supervisory Service in Yeouido, Seoul, on the morning of the 9th, Lee was asked whether going through the Financial Services Commission would take a long time for special investigators, and said, "Reaching a conclusion within 48 hours and the prompt preservation of evidence are key," adding, "It does not matter who holds the initiative."
However, Lee explained that, since all investigative materials are with the FSS, discussions are underway to prevent information leaks, and a conclusion will come soon.
He showed a positive stance on the licensing policy for issuance bills, including the integrated investment account (IMA). Lee said, "In the case of a particular company, licensing and sanction issues coexist, but we are making careful efforts to ensure that licensing is not impeded in relation to venture capital."
Samsung Securities applied for issuance bill licensing last year, but the FSS's internal control-related sanction review, uncovered in Apr. of the same year, is still underway. Lee appears to have made his remarks with this case in mind. The result of Samsung Securities' sanctions review is likely to come out this month.
Lee went on to explain that, regarding the progress of the inspection related to MBK Partners, the matter will soon move to the Financial Services Commission's agenda after the FSS reaches its decision.
After the Homeplus Co. incident, the FSS launched an inspection of the major shareholder MBK Partners and detected alleged unsound business practices and violations of internal control obligations. In Nov. last year, the FSS gave MBK prior notice of a heavy sanction plan that included "suspension from duty." This is the first case in which the financial authorities have pursued heavy sanctions against a private equity fund (PEF) general partner (GP).
Lee said, "We closely examined the matters related to MBK and have referred the case to the sanctions review committee to proceed with measures regarding legal violations," adding, "It is taking time because we need to hear MBK's opinions and review the legal issues."
He also said the composition of civilian members of the sanctions review committee, which had long been centered on legal professionals, will be diversified to ensure fairness in sanctions. He said, "We are guiding the formation toward appointing non-lawyers as civilian members of the sanctions review committee. We are trying to reduce the influx of many practicing attorneys."
Regarding the announcement in this work plan to shorten the accounting audit review cycle for KOSPI200 corporations from 20 years to 10 years, he noted, "We need to think about this over the mid to long term, and we should move to five years, which is the level in the United Kingdom."
Lee said, "In terms of transparency related to the capital market, where there is early entry and early exit, the audit review system is an important part. The public audit review system must operate to expel unqualified entities, but the number of accounting audit reviewers is only about 60 at present, and this measure reflects that." He also drew a line, saying the audit review-related work plan has nothing to do with securing jobs for accountants.
Lastly, he took a cautious stance on allowing a virtual asset exchange-traded fund (ETF). Lee said, "It is difficult to comment because this is a policy matter," but added, "The trend shows significant impact, including chain reactions where virtual assets and legacy finance are linked," and "There are concerns that ETFs should reflect such aspects."