“Securities companies take their own measures before selling leveraged ETFs, such as ‘no recommendation to customers’”

National Power Ahn Sang-hoon "We took protective measures due to concerns about risk... We are creating a lot of victims because of the government."

(Seoul = Yonhap News) Reporter Park Soo-yoon = On the 8th, People Power Party lawmaker Ahn Sang-hoon, a member of the National Assembly's Finance and Economic Planning Committee, claimed that circumstances have been discovered in which securities firms and asset management companies that sold single-stock leveraged exchange-traded funds (ETFs) seem to have recognized and responded to the risks of the product, such as taking measures to prohibit recommendations on their own even before the product was launched.

According to data submitted by Rep. Ahn from the Korea Financial Investment Association and others, on January 13, the Blue House summoned five executives from major securities companies and asset management companies and held a private meeting to discuss a 'U-turn plan' for individual investors who moved to overseas stock markets.

From the government side, Kim Yong-beom, then-Chief of Policy at the Blue House, and other attendees from the financial world included key executives from Samsung Securities, Korea Investment & Securities, Mirae Asset Securities, Samsung Asset Management, and Korea Investment Trust Management.

A plan to introduce leveraged ETFs based on individual stocks was put on the discussion table, and the Samsung Electronics and SK Hynix single-stock leveraged and inverse ETFs were actually listed on May 27.

However, it was found that the securities firms and asset management companies that attended the meeting did not engage in active marketing before or after the listing of the product.

According to data obtained by Rep. Ahn's office through the Korea Financial Investment Association, Samsung Securities announced in an official letter sent to private bankers (PBs) ahead of the launch of a single-stock leveraged ETF on May 27 that it would take "no recommendation measures" for the product.

The official document also included that if the solicitation is discovered, the employee's key performance indicator (KPI) will be deducted.

Samsung Asset Management suspended the 'Single Stock Leverage Association Required Training Completion Event' for all customers on May 21, and related advertising and marketing also stopped after the Financial Services Commission, Financial Supervisory Service, and Korea Exchange announced 'Single Stock Leverage Product Supplementary Plan' on July 16.

Korea Investment & Securities and Korea Investment Trust Management also suspended related advertising and marketing as of July 20, after the financial authorities took action.

Mirae Asset Securities conveyed its position to the lawmaker's office, saying, "Mirae Asset has long classified leveraged and inverse products as high-risk products and does not recommend them to customers."

In response to this, the opposition party argued that the financial sector had already sensed the risks before listing the single-stock leveraged ETF and had taken measures such as banning investment recommendation, but the Blue House ignored it and pushed ahead with the launch, Rep. Ahn argued.

Rep. Ahn said, "Even companies that were mobilized to meetings hosted by the government during the launch of the single-stock leveraged ETF were strongly concerned about the risks and took active customer protection measures. On the other hand, the government, which should prioritize the people, promoted policies without sufficient preparation, creating numerous victims," ​​and added, "We will closely examine the problems in the policy decision-making and implementation process during the government audit."