The Financial Supervisory Service will begin inspecting Mirae Asset Securities' key branches next week. Authorities plan to closely examine whether there were any violations related to registration or operations amid a surge in professional investors during the SpaceX IPO housing subscription process. This is widely regarded as a de facto second inspection following the initial review surrounding the SpaceX IPO housing subscription. If additional violations are confirmed at the key branches alongside the previously concluded inspection into the failed SpaceX IPO housing subscription, stringent sanctions will become unavoidable.
According to the financial investment industry on the 10th, the Financial Supervisory Service is set to launch an inspection of Mirae Asset Securities' key branches early next week. While inspections of key branches were highlighted as a priority in the FSS's work plan earlier this year, this particular inspection carries a strong focus on uncovering any additional violations related to SpaceX. It is effectively a second inspection concerning SpaceX. The core focus of the review is reportedly whether the procedures for registering and managing professional investors were appropriate.
Mirae Asset Securities conducted the SpaceX IPO housing subscription targeting not general investors but professional and institutional investors. Financial authorities suspect that irregular sales practices, such as encouraging general investors to register as professional investors, may have occurred after the number of professional investors participating in the subscription reached 4,000.
Professional investors can register if they meet requirements such as having a monthly average balance of financial investment products exceeding 50 million won for at least one year within the past five years and an annual income of over 100 million won. Although these criteria are relatively lenient, professional investors are excluded from protection under the Financial Consumer Protection Act. Therefore, authorities intend to examine whether 'professional investor registration sales' took place at key branches and other sales outlets.
Financial authorities are scrutinizing key branches because they are where investors are first encountered, and private bankers (PBs) with annual salaries reaching tens of billions of won are concentrated there. Since PB compensation is determined by performance, there is a high likelihood of excessive sales practices. It has also been pointed out that some branch offices and PBs at securities firms' headquarters either do not intervene or conduct only perfunctory audits due to the revenue they generate.
Furthermore, as the stock market boom has led to an increase in elderly investors visiting securities firm branches, financial authorities are strengthening inspections of key branches. The Financial Supervisory Service inspected Meritz Securities and Samsung Securities last year, followed by Korea Investment & Securities and Hana Securities this year. Plans are in place to continue inspections centered on major firms going forward.
The level of sanctions against Mirae Asset Securities is expected to be determined after both the inspection into the failed SpaceX IPO housing subscription and the key branch inspection are completed. A financial industry official stated, "With the addition of the key branch inspection, a high-intensity review is anticipated," adding, "Given that there have been cases where severe disciplinary actions such as business suspension were decided for key branch-related violations, the level of sanctions could be even stricter."
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