Yoon Seok-heon: "Supervision of Lime Scandal Needed Caution... Apologies to Investors"

The Political Affairs Committee Expressed Apology but Drew the Line on 'Negligence in Supervision' Responsibility
"If Asked to Choose a Single Main Responsibility, It Lies with the Operator"

Yoon Seok-heon, Governor of the Financial Supervisory Service

[Asia Economy Reporter Kim Hyo-jin] Yoon Seok-heon, Governor of the Financial Supervisory Service (FSS), expressed an apology regarding the large-scale redemption suspension and loss incident of Lime Asset Management's private equity fund, but drew a line when it came to criticism that the FSS's supervisory failure exacerbated the situation.

On the 20th, at the National Assembly's Political Affairs Committee plenary session, Yoon responded to a question from Yoo Dong-soo, a member of the Democratic Party of Korea, asking, "Did the FSS take a passive and watchful approach rather than proactive and aggressive measures?" by saying, "Ultimately, I apologize for causing damage to investors."

Yoon further explained, "However, looking back to the time when the risk was detected, it was necessary to verify the facts thoroughly, and if that was not done well, it could have caused market confusion. The redemption procedures also had to be followed during the supervisory activities."

He added, "Rather than rushing, the approach was to carefully follow the procedures. So, I would say we approached the matter cautiously."

Yoon also stated, "Since September last year, there were no abnormal transactions, irregularities, or fraud," and added, "It was difficult to say that the damage was expanded due to the FSS's supervisory negligence."

In response to Jeon Hae-cheol, a Democratic Party member's criticism asking, "Did the FSS's continuous monitoring system work properly for Lime?" Yoon replied, "In Lime's case, post-registration was required, so there were some limitations that made it difficult for us to know the details."

When asked by Yoo Ui-dong, a member of the United Future Party, who he thought bore the main responsibility for the Lime incident, Yoon said, "If I have to choose in a short answer, it would be the asset management company (Lime)."

Regarding Kim Sung-won's criticism from the United Future Party that the Lime incident and losses from overseas interest rate-linked derivative-linked funds (DLF) were due to structural contradictions in the financial industry, Yoon said, "We will strengthen the FSS's continuous monitoring," and added, "We will enhance the FSS's continuous monitoring function."

When asked by Jeon Hae-cheol about the estimated scale of damage caused by the Lime incident, Yoon said, "It is estimated to be just under 1 trillion won."