Ahead of the Aug. 17 Democratic Party of Korea convention to elect the next leadership, candidate Jung Chung-rae and candidate Kim Min-seok clashed over the single-stock leveraged exchange-traded fund (ETF) fiasco, which is said to have caused losses of more than 50 trillion won. Jung said, "When he was prime minister, Kim chaired the meeting," and argued, "Strong measures are needed to hold him accountable." Kim countered that it was "excessive political offensive" and called the claim inappropriate.
At the fourth debate for Democratic Party leader held on the afternoon of the 12th, Jung targeted Kim and pointed to the losses suffered by leveraged ETF investors. Jung said, "There are many retail investors bruised by single-stock leveraged ETFs," adding, "If you look at the Cabinet meeting bill on Apr. 21, the submitter is listed as Prime Minister Kim Min-seok and the chair is also Kim."
He continued, "The Financial Supervisory Service (FSS) chief said, 'I should have stopped it even if I had to lie down,'" criticizing it as "a term that doesn't fit and an oxymoron, like hot ice cream, called a single-stock ETF."
He added, "We raised the margin to 30 million won, and from September, we put safety measures in place to allow only buy and sell orders of 20 shares or more, but it is still insufficient," and said, "If there is something to hold to account, it is up to the president, but strong measures are also necessary."
Kim expressed apologies over the leveraged ETF fiasco but rebutted Jung's claims. Kim said, "I would like to say sorry to the people," adding, "As it happened, I presided over the meeting that passed the leveraged ETF."
However, he said, "Because it was a matter unique to the economic team, there was no special in-person briefing in advance," adding, "Various problems arose, and since then, through measures such as raising the margin and so on, it seems we are now finding a certain degree of stability."
He also pushed back against Jung's claim that trading in leveraged ETFs should have been halted immediately at the time. He said, "If, as some say, trading had been stopped right then and there, it would have caused bigger missteps and confusion," adding, "In particular, I think it is inappropriate for the ruling party to make it an excessive political offensive."
Meanwhile, the Democratic Party is conducting votes in Honam, which has the highest proportion of dues-paying members (about 510,000, 32.9%), and the greater Seoul area (590,000, 38.3%). Voting in the Honam region runs on the 13th, and voting in the greater Seoul area runs through the 14th, with the final winner to be determined at the convention on the 17th.