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Park Hyeon-joo, Chairman of Mirae Asset Securities (Photo = Mirae Asset Securities) |
[Alpha Biz= Kim Jisun] South Korea’s Financial Supervisory Service (FSS) has launched an open-ended inspection into Mirae Asset Securities over the “zero allocation” controversy involving shares of SpaceX, aiming to review the entire process behind the failed IPO allocation with a focus on investor protection.
According to financial authorities on June 16, the FSS has not set a deadline for the inspection and is broadly examining investor protection issues tied to the incident. Complaints related to the failed allocation have also been filed with the regulator.
The inspection initially focused on the process by which individual and institutional investors were registered as professional investors eligible to participate in the IPO subscription. Under Korea’s Financial Consumer Protection Act, professional investors are exempt from certain investor protection requirements, prompting regulators to assess whether adequate risk disclosures were provided in advance.
However, following the collapse of the share allocation, the scope of the probe has expanded to include the circumstances surrounding the failure itself. The FSS began an on-site review on June 5 and escalated it to a formal inspection on June 9.
Regulators view the outcome—where no shares were allocated at all—as highly unusual, even though final IPO allocations are typically determined at the discretion of the lead underwriter.
Authorities are also paying close attention to Mirae Asset Securities’ early and aggressive marketing efforts, despite uncertainties over final allocation volumes. In particular, Park Hyeon-joo, chairman of Mirae Asset Group, stated in an April media interview that a substantial allocation of SpaceX shares was expected and that the firm aimed to offer opportunities to as many investors as possible.
The FSS is now expected to examine whether there were broader internal control failures, including management conduct and the company-wide subscription drive.
The incident has reignited concerns over exaggerated or misleading advertising and overheated marketing practices across the financial industry. Korea Investment Trust Management had promoted its ETF, “ACE U.S. Space Tech Active,” as including SpaceX IPO shares via Mirae Asset Securities. However, the fund ultimately acquired the stock through market purchases, leading to investor disappointment over lower expected returns. The ETF’s price fell 10.81% in the previous session.
The FSS said it plans to address these issues within its task force on improving financial investment advertising regulations, launched in April, and aims to introduce reform measures in the third quarter.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
