Kim Yong-beom, the chief policy officer at the Blue House, has been criminally accused in connection with the single-stock leverage exchange-traded funds (ETFs) that have been cited as a cause of rapid stock market fluctuations.
On August 3, former Seoul City Councilor Lee Jong-bae (People Power Party) announced that he filed a complaint against Kim with the Supreme Prosecutors' Office for abuse of power, coercion under criminal law, and obstruction of business through intimidation.
Lee claims that Kim abused his authority by directing financial authorities to consider the introduction of single-stock leverage ETFs during a media interview in January, where he questioned, “Why can it be done in Nasdaq but not in our country?”
He further argued that if there was external pressure from the Blue House, it would also constitute coercion and obstruction of business through intimidation.
According to materials submitted by the Financial Services Commission to Kim Mi-ae, a member of the People Power Party, the commission indicated that it was reviewing plans to amend regulations and establish a system to launch the product in the second half of this year after a report on easing asymmetric ETF regulations was prepared in January.
Lee stated, “If it were not for Kim's directive, the financial authorities would not have hastily introduced single-stock leverage ETFs, which are expected to cause severe side effects, just before the elections, and investor losses could have been minimized.”
He added, “Among industry experts, there was a prevailing opinion that the introduction should occur in the second half of the year after sufficient simulations to ensure market stability. They warned that single-stock leverage could trigger negative compounding effects and significant forced selling, exacerbating overall index declines.”
Lee criticized the situation, saying, “Despite warnings from industry experts and the Financial Services Commission about the risks, the hasty introduction of single-stock leverage ETFs right before the elections has created numerous victims. This is a horrific case of stock manipulation by the state and a major abuse of power.”
The People Power Party has announced plans to pursue a national investigation into the introduction of single-stock leverage ETFs and has called for Kim's dismissal, stating, “Kim has only offered evasive excuses, claiming that ‘this is not unique to our market’ and ‘leverage ETFs are not the only cause.’”
In response to a question about the recent decline in the domestic stock market during a briefing in Brazil on July 28, where President Lee Jae-myung was visiting, Kim stated, “There have been significant fluctuations due to various factors, and the past two to three months have not been unique to us.”
He also mentioned, “We plan to conduct a comprehensive review of the structural factors contributing to the volatility, not just focusing on leverage ETFs.”
* This article has been translated by AI.
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