[2026 Parliamentary Audit] "Someone Should Go to Prison" "Kim Yongbeom Must Appear": Clash Over Responsibility for Leveraged ETFs

Ruling and opposition parties clash at FSC audit
People Power Party again calls for Kim Yong-beom to be summoned as a witness

"This is a matter for which someone should go to prison."

"Tens of trillions of won in public assets were effectively plundered. It was the worst policy failure."

A heated dispute over responsibility erupted at a parliamentary audit over single-stock leveraged (SSL) products. The opposition again called for former presidential policy chief Kim Yong-beom and others to be called as witnesses, while urging Financial Services Commission (FSC) Chairman Lee Eog-weon to acknowledge the policy failure and apologize to the public. The ruling party, meanwhile, pointed to problems in the policy's design and implementation but drew a line at claims of presidential office involvement, calling them somewhat "conspiratorial."

Yonhap News Agency

Appearing at the National Assembly's Political Affairs Committee audit of the FSC and other agencies on the morning of the 8th, Chairman Lee apologized to the public, saying, "We introduced [SSL products] after considering various factors, including the need for the policy. However, as a result, we created various circumstances that caused concern among the public, and as head of the financial authorities, I sincerely apologize for that."

His apology came after lawmakers raised a barrage of concerns from the first round of questions about the side effects of launching single-stock leveraged exchange-traded funds (ETFs). The government had previously allowed the listing of so-called "Samjeonnix" (a combination of Samsung Electronics and SK hynix) leveraged products, saying the move would address asymmetric regulations that allowed investment overseas but not in Korea. However, it faced criticism for effectively turning the domestic stock market into a betting arena. Following the launch of the products, which track twice the daily price movements of their underlying stocks, market volatility surged and large losses among individual investors came to light.

Opposition lawmakers in particular repeatedly raised claims of presidential office involvement in the introduction of SSL products and called for former policy chief Kim to be summoned as a witness. Rep. Park Seong-hoon of the People Power Party said, "The hastily launched single-stock leveraged ETFs, which were introduced just one week before the local elections, caused 54 trillion won in losses to the public. Suspicions have been raised that the presidential office intervened in the launch of high-risk financial products. So why isn't former policy chief Kim being called as a witness?"

He said that, contrary to the government's explanations so far, claims had emerged that financial institutions attending a closed-door meeting hosted by the presidential office last January did not propose introducing SSL products. He argued that former policy chief Kim and others should be called as witnesses at the parliamentary audit to establish the details of how the policy was decided. Rep. Park Joon-tae of the People Power Party also cited these circumstances, saying, "I have provisionally concluded that President Lee Jae-myung and the presidential office were the ringleaders behind the single-stock leveraged ETFs, while the Korea Financial Investment Association and the Financial Services Commission were accomplices."

Rep. Shin Dong-wook of the People Power Party also said, "Everyone, including people inside the presidential office and the financial sector, points to former policy chief Kim." He added, "Then shouldn't he come here [to the audit] and clearly explain why he did it?" Rep. Cho Jung-hoon of the People Power Party, who called on Chairman Lee to apologize to the public, said, "I appreciate the courage it took to apologize. I recognize that courage, but I wonder whether the person who should be standing here is really the chairman of the Financial Services Commission."

Asked by Rep. Park Joon-tae whether he still stood by his previous position that SSL products fell under the FSC's jurisdiction and were not introduced under pressure from the presidential office or former policy chief Kim, Chairman Lee replied, "I have listened to various opinions. For a long time, people have continued to ask why such products are allowed overseas but blocked here." Rep. Park responded, "I will take the FSC's position at face value: that it led the effort. Whether through a parliamentary investigation, a criminal investigation or a special counsel investigation, this is a matter for which someone should go to prison."

Responding to criticism over whether he would introduce SSL products again if given the chance, Chairman Lee explained, "At the time, the foreign exchange market was in a very difficult position. The exchange rate was nearing 1,500 won, and some media outlets were even talking about a third foreign exchange crisis." When lawmakers further questioned the political motives behind the launch, noting that the FSC had no analysis of the products' potential impact on the foreign exchange market and that the launch itself was rushed, he replied, "I will keep in mind that we should have examined things more carefully, beyond simply considering the need to introduce the policy."

Lee Eokwon, chairman of the Financial Services Commission, exchanges greetings with Yoo Dongsoo, chair of the National Assembly's Political Affairs Committee, during a parliamentary audit of the commission and other agencies at the National Assembly on Oct. 8, 2026. Photo by Yoon Dongju

The ruling Democratic Party of Korea, meanwhile, pointed to failures in market monitoring but countered that the launch of SSL ETFs had also been unnecessary in some respects. Rep. Park Hong-bae of the Democratic Party said, "The opposition is taking a somewhat conspiratorial approach, claiming that the presidential office unilaterally pushed for their introduction." He asked, "Single-stock leveraged ETFs had been available in the United States for a long time, and in Hong Kong a year ago. Since domestic investors were already trading them based on Korean stocks, wasn't their introduction inevitable?" Rep. Jeon Hyun-hee of the Democratic Party also defended the move, saying, "The opposition's criticism misses the point. Their introduction was unavoidable at the time."

Rep. Kim Hyun-jung of the Democratic Party said, "The fundamental cause of this problem was not approval of the product launch. It was the failure of the Korea Exchange to oversee the entities using high-frequency trading, or HFT, strategies, and the failure of the exchange itself to fulfill its responsibility to supervise them." According to Rep. Kim, average monthly HFT trading value was about 2,700 trillion won from January through May, but rose 52% to 4,200 trillion won from June through August, after the single-stock leveraged ETFs were listed. She argued that it was necessary to conduct a comprehensive investigation into trades linked to ETF rebalancing and consider separating the exchange's market surveillance function into an independent body.

In response, Chairman Lee said, "The exchange continuously monitors areas where there is a possibility of unfair trading," adding, "We will conduct more rigorous checks so that we can respond immediately if illegal activity is detected." Regarding reforms to the exchange's governance structure, he said the FSC would examine overseas examples and consider various options.

The ruling and opposition parties also clashed over the scale of losses caused by SSL products. Rep. Choi Eun-seok of the People Power Party criticized the financial authorities, saying, "When a capital market disaster has shaken the market like this, isn't it their obvious duty to disclose how much the public has lost as a result, what lessons should be learned from launching these products, and what the FSC should do when launching similar new products in the future?"

Citing data from the Financial Supervisory Service, Rep. Choi claimed that direct losses totaled 2.3 trillion won, and that this figure understated the actual losses because it included only losses confirmed through sales. He also said, "The serious side effect of SSL products is the 'tail wagging the dog.'" He added, "If you include indirect losses as well, tens of trillions of won in assets belonging to Korean individuals and institutions vanished into thin air. Tens of trillions of won in public assets were effectively plundered."

The ruling party, however, countered that the opposition's estimates of the losses were inaccurate. Rep. Park Hong-bae said, "The prices of the underlying assets, SK hynix and Samsung Electronics, fell, and those investments were leveraged, so I think it would be reasonable to put the losses at about half that amount." He also responded to claims that the National Pension Service's investment losses were close to 54 trillion won, saying, "Citibank also explained that the figure was an unofficial market commentary." Chairman Lee likewise emphasized that the estimate was inaccurate, saying, "The figure covers all leveraged ETFs, not just SSL ETFs."

The Political Affairs Committee is scheduled to resume its audit at 2 p.m. In addition to whether the presidential office was involved in the introduction of SSL products, questions in the afternoon are expected to focus on recent cyberattacks on financial institutions, household debt, real estate, and the background to the Korea Development Bank and Industrial Bank of Korea's investments in the film "Assassins."

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