South Korea’s financial watchdog has indicated that regulatory intervention in the country’s private equity industry is becoming unavoidable, citing concerns over market integrity and investor protection, according to a report by Reuters.
Lee Chan-jin, governor of the Financial Supervisory Service (FSS), said authorities would take a firm approach toward private equity practices that undermine fairness and damage confidence in the sector. Speaking at a meeting with domestic private equity firms on Tuesday, Lee warned that recent conduct by some managers had disrupted market order and weakened public trust.
“The market order has been disrupted by illegal and unfair behaviour at certain private equity firms, with infringements on investor interests significantly eroding social confidence in the industry,” Lee said.
He added that government intervention would be inevitable in order to restore credibility, though he did not outline specific regulatory measures or cite individual cases. Lee stressed that regulators would respond sternly to any practices deemed to violate market rules.
The comments come amid heightened scrutiny of the private equity sector in South Korea, following several high-profile cases that have drawn the attention of prosecutors and financial authorities.
Most notably, MBK Partners – one of North Asia’s largest private equity firms with more than $32bn in capital – is currently under investigation over its handling of the sale of troubled supermarket chain Homeplus. MBK was not among the 12 firms that attended the meeting with the FSS.
