Watchdog vows to complete inspection of troubled funds by next year

Financial Supervisory Service Gov. Lee Bok-hyun speaks to lawmakers during a parliamentary audit held at the National Assembly on Tuesday. (Yonhap)

The head of South Korea’s financial watchdog pledged Tuesday that he will complete an inspection into the troubled funds and products that led to investors suffering hefty losses in recent years.

The vow follows public criticism that the Financial Supervisory Service failed to screen and prevent fiascos including Ponzi schemes carried out by hedge funds and local financial institutions in recent years. The FSS has yet to decide on the reimbursement plans regarding the troubled 2019 German heritage derivative-linked securities, with 2,000 Korean victims and the frozen asset amounting to 520.9 billion won ($362.9 million). It drew ire from its victims, as the FSS has already ordered the institutions that sold other similar troubled products around the time to compensate its victims.

“We plan to complete an overall inspection into the troubled funds by the end of next year,” FSS Gov. Lee Bok-hyun said in a parliamentary audit.

“A separate team is looking into the general issues of private equity funds here,” he added to lawmakers.

On the delay on the decisions surrounding the German heritage DLS, Lee cited the difficulties of acquiring documents from overseas.

“There were obstacles in acquiring some documents from overseas and there were delays due to the prosecutors’ ongoing probe into the product,” Lee…

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