South Korea’s opposition seeks inquiry into leveraged ETFs, alleges effort to cut off political responsibility

South Korea’s People Power Party has formally called for a parliamentary investigation into the introduction of single-stock leveraged exchange-traded funds, describing the controversy as a possible “gate.”

The party submitted a request on the fourth under the title, “Parliamentary investigation to determine responsibility for market distortion and losses suffered by individual investors caused by specific single-stock leveraged ETF products, and to establish measures to prevent recurrence.” It said the inquiry should examine how the products were introduced and who bears responsibility for the resulting losses.

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The essence of this incident is clear. Who on earth rushed to introduce such a risky product and shifted massive losses onto individual investors?

At a National Assembly meeting, policy committee chair Lim Ja said the central question was who had rushed such risky products into the market and shifted substantial losses onto individual investors. She accused presidential policy chief Kim Yong-beom of pushing the measure and financial regulators of approving it rapidly. She also criticized Financial Supervisory Service Governor Lee Chan-jin, saying he had responded after the crisis with claims that the products should have been stopped at any cost.

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President Lee Jae Myung dismissed Chief Kim at lightning speed, in just one night and two days, without a convincing explanation.

Lim further questioned President Lee Jae Myung’s rapid dismissal of Kim, saying the president removed him after only one night and two days without offering a convincing explanation. She alleged that Kim’s son and the son of Lee, who was responsible for supervision, both worked at Mirae Asset Management, which she said collected substantial fees from the products.

The People Power Party said the dismissals had intensified suspicions that political power was trying to sever responsibility and conceal a “dark connection” with the financial industry. It urged the Democratic Party to support the investigation and said it would pursue a special counsel if the inquiry found serious illegal or unlawful acts.

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The suspicion is growing that this was a hurried attempt to cut off responsibility in order to conceal a dark connection between political power and the financial industry.