● FSC avoids responsibility for "releasing regulations"
The day when the Financial Supervisory Service released an interim survey for Lyme Asset Management. The FSC has announced plans to improve private equity. Concerned about the government's accountability of the Lime crisis, the FSC noted it at the beginning of a press release that summarized the main Q & As that are expected.
<Major Q & A data on financial institution private equity fund improvement plan (2020.02.14)>
-Isn't the regulation loosened too much through the reorganization of the private equity system in 2015?
= Because all regulations have two-sidedness, it is difficult to tailor the adequacy of system improvement due to accidents that occurred after the fact. Maintaining regulations that have been left behind due to concerns about side effects cannot provide better financial services
Does the Lime crisis have nothing to do with deregulation in 2015?
As a result of private equity fund inspection, most private equity funds are being operated in accordance with the purpose of institutional improvement. It is not advisable to link some private equity issues to institutional improvements.
Kim Jung-gak, a financial market policy officer at the Financial Services Commission, asked the government's responsibility for the deregulation of private equity funds at the press conference. "It was good to have perfected the policy, but it was not possible to anticipate future accidents." Most private equity funds, except for backs, are operating normally. ” The Lime crisis is not a structural problem due to some managers 'deviations, so the financial authorities' responsibility is not large.
Eun Sung-soo, chairman of the finance committee, also said at a news conference yesterday, "It is not true that the FSC is on the ground or evaded responsibility for the Lime crisis." Chairman Lee said, "We will keep the net function of the private equity market alive and announce improvement plans to manage liquidity issues and sellers' responsibilities more." "There is no perfect system, and if it is prohibited, there will be no accident. I think that products should go forward. A fundamental dilemma is that changing regulations for innovative financing can have unexpected side effects. "
After large-scale damages from private equity funds such as DLF and Lime came out, the Financial Services Commission announced measures, avoiding words such as 'regulation' and 'responsibility', 'improvement of the system', 'some complementary', and 'needed minimum rules.' I chose a word like "
Contrary to the position of the Financial Services Commission, many outsiders consider the financial authorities to be responsible for the Lime crisis. After the deregulation that resulted from the amendment of the Capital Markets Act in 2015, the private equity market grew rapidly and accidents broke out. The bill to change private equity manager registration from 'authorization' to 'registration' and lower the minimum investment of individual investors from 500 million to 100 million won passed the National Assembly's plenary session on July 6, 2015. In 2015, the amendment of the bill initiated by the government of the Park Geun-hye administration in 2014, which reflects legislation initiated by Saenuri Party Park Dae-dong and Democrat Lee Jong-gul, was finally passed. At the passage of the amendment, the Financial Services Commission expected that "the investment opportunity to solve the" money cure "of floating funds will be provided, and the funding conditions of listed companies will be greatly improved."
Financial unions and civic groups say the deregulation in 2015 triggered the lime crisis five years later. The Democratic Trade Union's National Office for Trade and Finance says, "Lime is a tragedy caused by the FTC's failure." The Secretary-General held a press conference in front of the Financial Services Committee on Monday, stating that "private funds, which are not regulated by the financial authorities and have no public disclosure obligations, have been registered unintentionally and suddenly." The union's opinion is that as a result of the 2015 amendment of the law to foster super-large investment banks, securities companies have been engaged in the sale of high-risk products and have forced their salespeople to perform in these products.
● The gap between 'minimum regulation' and 'punishment damages'
Where there's money, there's a scammer. In the environment of private fund growth due to deregulation, 'people' flowed into the private equity industry. For example, Cho Beom-dong, a five-year-old nephew of the former Attorney General of the country, who was convicted of embezzlement and the like. Mr. Cho's general manager, Colink PE, was established after deregulation in 2015, making it easier to register for private equity managers. According to the prosecution investigation, Mr. Cho falsely disclosed a 5 billion won equity stake using a private equity fund, attempted to manipulate the stock price by issuing 15 billion won of convertible bonds that had never been flowed in. I am charged with one.
An FSS official said, "Financial authorities lowered the barriers to managers and investors, which led to a large sum of money in the private equity market. They also flocked to the underprivileged people," he said. Lee Jong-pil, vice president of Lime Asset Management, one of the main causes of the Lime crisis, has also been on prosecution investigations for alleged embezzlement of billions of leads and tens of billions of employees using private equity funds.
In the wake of Cho Bum-dong, Lee Jong-pil, DLF and Lime, financial unions and civic groups say it is time to introduce a punitive damages system. Participation Solidarity said, "The Financial Services Commission's system improvement plan only supplemented the internal system of financial institutions and strengthened monitoring of supervisory authorities." It is necessary to introduce a punitive damages system that makes the company responsible for compensation up to three times the amount of damages. . The office also said, “If financial companies make indiscriminate illegal sales, which are like fraud, we should prevent punishable damages against similar wrongdoing.”
Regarding the voice of punitive damages, the chairman of the financial committee said, “Is the crime going away if the death penalty is introduced,” he said. In addition, Chairman Eun said, "We will introduce a punitive penalty system for incomplete sales." Kim Deuk-eup, the representative of the Financial Justice Coalition, said, “There is a demand for punitive damages in civil society, so it is called“ punishment penalties. ”However, only 50% of penalties are imposed on sellers for incomplete sales. In the end, even if the sellers' faults are revealed, incomplete sales practices won't go away because they only pay half of the proceeds. ”
● The FSC and FSS, slightly different stances
Eun-Soo Eun, Chairman of the Financial Services Commission and Kim Jong-Kak, Financial Services Commissioner of the Financial Services Commission, stressed the net function of the private equity fund when asked about the Lime crisis. Despite the announcement of countermeasures after the devastation, he repeatedly said that regulations should be kept to a minimum and the foundation of private equity should be maintained.
On the other hand, Yoon Seok-hun, the director of the Financial Supervisory Service, apologized for the Lyme incident on the 20th of the National Assembly's Political Affairs Committee, saying, "I feel sorry for the public. And we will do our best for quick damage remedy. " It is a different answer than the Financial Services Commission stressed that it is not responsible for policy failures. In fact, the Financial Supervisory Service expanded the financial consumer protection center dedicated to investor protection through large-scale reorganization after the DLF and Lime crisis.
The Center for Participation and Solidarity points out the current relationship between the FSC and the FSS. Participation solidarity said, "It is almost impossible for the FSS to fully pursue financial consumer protection under the current financial supervision system under the Financial Supervisory Service under the Financial Services Commission with the aim of monetary policy and promotion." You have to set up an independent body. " The Financial Services Commission, which aims to expand and innovate the financial markets, and the Financial Supervisory Service, an organization that investigates and monitors financial markets, must see a difference in temperature.
Some have pointed out that there is a difference in perspective between members of the two organizations. A Financial Supervisory Service official said, "If the progressive economists, such as Kim Sang-jo, President of Cheong Wa Dae, Deputy Director of Finance, Yoon Seok-heon and Deputy Director of Won Seung-yeon, formed the axis, the other side is the Orthodox Economic Bureaucrats from the Ministry of Finance and the Ministry. "Some of the visual differences at the Financial Services Commission and the FSS are due to disagreements between these two groups."
Kim Deuk-e, president of the Financial Justice Coalition said, “The regime changed after the private equity regulation was relaxed in 2015, when the conservative government was relaxed, but the pace of the deregulation of financial regulations remained the same. The Korean economy reminds us of the ambassador of the movie Black Money, which deals with the Lone Star case. Mr. Kim said, "Be careful not to see many cases of private equity managers who have been arrested by the Financial Services Commission, such as Byun Yang-ho, who was arrested for selling the foreign exchange bank to Lone Star, but later acquitted. "He added.
In announcing private equity measures, the Financial Markets Commissioner Kim Jong-gak likened private equity to bronze. "There was progress from human development to the Stone Age to the Bronze Age. The invention of bronze could be used as a means of murder and injury. But without the use of bronze, humanity would have stayed in stone." If you aren't able to take a step because of concerns about the accident, you're talking about private equity in Korea. ”
A metaphor for the same financial system, but another view. Dr. Ha-Joon Jang Professor of Cambridge University compares the financial system to automobiles in his book Lecture on Economics. "There was no traffic signal, no ABS brake, no seat belts, no airbags at the time when people were walking or riding on horse-drawn carts the fastest." "Because the cars are powerful and fast, anything very small can do great damage." The power and importance of finance is so great that it can cause massive damage to millions of people, so strict regulations are necessary.
No one denies that financial instruments, such as 'bronze' or 'cars', are private and beneficial. However, the positions of financial committees, civic groups and experts are mixed on how to regulate such powerful and important products. Professor Ha-jun Jang warns, "With decades of" financial innovation, "the current financial system has become too complex and no one can control it." Regulatory agencies as well as financial industry workers say it is impossible for funds, funds and mortgage lenders to get a good idea of the financial products. This is where Lime Asset Management comes to mind, as funds try to make a profit with a complicated cyclical, multi-tiered investment structure. In fact, the sales staff and individual investors who sold the Lime Fund were often unaware of how they were intertwined. Professor Jang Ha-jun wrote, "It should be simplified by limiting the spread of complex and entangled financial products, especially when the creators of the product cannot clearly demonstrate that the benefits of the product are more damaging than that."
Investors may invest in private equity with the belief that the FTC announced that "these are some of the manager's deviations, not the system-wide problem, so a tweezers supplement is sufficient." The Financial Services Commission announced improvement measures such as raising the minimum investment amount of individual investors from 100 million to 300 million after the DLF issue was raised. There is. In a series of private equity-related accidents, the Financial Services Commission's announcement that it will "promote regulatory reforms" does not address the question that it is time for surgery, not tweezers.
(Photo = Yonhap News)
[Reporting File] Financial Authority Says No Private Equity Problems
2020-02-21T17:35:46.843Z
● The day when the Financial Supervisory Service's Financial Supervisory Service's Lime Asset Management Interim Survey announced that it would avoid “regardless of deregulation. The FSC has announced plans to improve private equity. Concerned about the government's accountability of the Lime crisis, the FSC noted it at the beginning of a press release that summarized the main Q & As that are expected.
Source: sbskr