FSS Summons New Private Equity Management CEOs... Emphasizes Investor Protection and Regulatory Compliance

Mr. A of OO Asset Management recently violated the principle of prohibiting the use of insider job information. He enabled a family corporation to purchase the relevant investment securities using undisclosed information, such as details about convertible bonds (CB) scheduled to be included in the fund. According to the Capital Markets Act, information learned on the job must not be used for the benefit of oneself or a third party.

Mr. B of XX Asset Management recently violated the restriction on trading financial investment products by employees of private equity management companies. He traded listed stocks not only through his own account but also through accounts in the names of others, and failed to report monthly trading statements and the fact of opening accounts. Under the Capital Markets Act, employees may only trade financial investment products through a single account in their own name, and must notify the company of a summary of their trades on a quarterly basis.

The Financial Supervisory Service (FSS) held a briefing session on the morning of October 2, 2026, at its Yeouido office in Seoul, providing newly established private equity management company CEOs with guidance on regulatory violation cases. Since private equity management companies operate with small teams, there is a high risk of regulatory breaches due to lack of work experience, and concerns over insufficient investor protection remain significant.

Suh Jaewan, Deputy Governor of the FSS, emphasized, "Private equity management companies must strive to establish sound business practices that prioritize the interests of investors," adding, "Despite ongoing briefings on enforcement cases and other guidance, similar illegal acts continue to occur. This can only be attributed to a lack of attention by the CEO, who is the chief officer responsible for internal controls. As the new duty of care structure is now in effect, strengthening CEO responsibility, it is ever more important for CEOs themselves to directly oversee internal controls."

The FSS announced plans to continue communicating with private equity management companies through such briefings, supporting them so they can faithfully perform their original role of providing productive funding to the market.

This content was produced with the assistance of AI translation services.