Expedient Selling
The Korean financial authority is putting the brake on the resale of the Vietnam Landmark 72 Asset-backed Securities (ABS) Fund, which has caused controversy over selling the private equity investment product in a form of public subscription. Accordingly, Mirae Asset Daewoo will no longer be able to create 15 special purpose companies (SPCs) and sell the product with each SPC drawing less than 49 investors differently from the time when it did six months ago.
An official from the Financial Supervisory Service (FSS) said on January 9, “We cannot allow the extension of its maturity with the existing method of selling the private equity investment product to numerous individual investors using 15 paper companies. We will deliver our policy that Mirae Asset can no longer sell the product in the same way.”
The product with a maturity of six months is facing the first maturity on January 21. The FSS is reviewing the plan to allow the maturity extension when the company sell the ABS to less than 49 investors according to the regulations limiting the number of people for the issuance of private financial investment products.
Mirae Asset sold the Vietnam Landmark 72 ABS worth 250 billion won (US$207.56 million) to 573 investors through 15 paper companies in June last year.
Local laws call for any financial product with 50 or more investors to be classified as a public subscription to become subject to a number of FSS regulations, including the submission of a registration statement. Controversy has continued that Mirae Asset allegedly tried to get around the capital market law by selling the ABS product to unspecified individuals in the form of public subscription, though it is a private investment product.
In this regard, the FSS began an on-site investigation to look into whether Mirae Asset Securities breached the capital market law in August last year and its disciplinary decision committee will decide on penalties by the end of next month.