Former Seoul city council member Lee Jong-bae said on the 3rd that he filed a complaint with prosecutors accusing Presidential Chief of Staff for Policy Kim Yong-beom of abuse of power, coercion, and obstruction of business by intimidation, alleging that he ordered the introduction of single-stock leveraged exchange-traded funds (ETFs).
Lee said the policy chief, in a media interview in January, said, "Why is what is possible on the Nasdaq not allowed domestically?" and directed financial authorities to review introducing single-stock leveraged ETFs. He added that immediately after the interview, Financial Services Commission (FSC) Chairman Lee Eog-weon said he would allow the launch of 2x single-stock leveraged ETFs and announced that the related subordinate regulations would be swiftly revised.
Lee also mentioned materials that People Power Party lawmaker Kim Mi-ae received from the Financial Services Commission. According to the materials, the Financial Services Commission reviewed a plan, in an internal document drafted in January, to revise the regulations and build systems in the second quarter, then launch products in the second half. He argued, "If there had been no instructions from the policy chief, there would have been no hasty introduction right before the election, and investor losses could have been reduced."
He also took issue with the response by financial authorities. Lee said Financial Supervisory Service Governor Lee Chan-jin told reporters at a media roundtable in June, in effect, that "it is true we prepared it in a hurry at the time." He further argued that at a National Policy Committee briefing at the National Assembly on the 29th of last month, Financial Services Commission (FSC) Chairman Lee Eog-weon avoided giving a direct answer to the question of whether there had been pressure from the presidential office.
Lee said many in the industry and experts believed the products should be introduced in the second half after sufficient simulations. He criticized the financial authorities for recognizing the risks yet rushing to implement the system ahead of the election, thereby magnifying investor losses.
He said, "The damage is very large due to the hasty introduction of single-stock leveraged ETFs," adding, "The policy chief should be detained and investigated to thoroughly determine what happened."