On the 27th, Attention on Mirae Asset Daewoo Ahead of Fair Trade Commission Sanctions

[Asia Economy Reporter Song Hwajeong] As the announcement of the Fair Trade Commission's sanctions against Mirae Asset Group approaches in one day, Mirae Asset Daewoo and the securities industry are on high alert regarding the level of sanctions.

According to the financial investment industry on the 26th, the Fair Trade Commission held a plenary meeting on the 20th regarding the provision of unfair benefits to special related parties by Mirae Asset affiliates and decided to announce the final review results on the 27th.

The Financial Supervisory Service reported that in December 2017, Mirae Asset Consulting, a company owned by Chairman Park Hyun-joo's family and serving as a holding company, earned profits through work orders concentrated from affiliates, and requested an investigation into Mirae Asset Group by the Fair Trade Commission. Mirae Asset Group is suspected of having Mirae Asset Consulting receive rental operation income obtained from the Four Seasons Seoul Hotel, Blue Mountain Country Club (CC), etc., through real estate funds formed by affiliates. According to the Fair Trade Commission's corporate group status disclosure, as of May last year, Mirae Asset Consulting is 48.6% owned by Chairman Park and 43.2% by relatives. The Fair Trade Act allows regulation of work order concentration sanctions for companies with a total asset size of 5 trillion won or more and a controlling family shareholding of 20-30% or more. Article 23, Paragraph 2 prohibits large business owners' families from obtaining unfair profits through affiliates. If recognized as unfair internal transactions, a surcharge of about 2-5% of the related sales can be imposed.

Accordingly, the Fair Trade Commission, which began the investigation, judged in November last year that Mirae Asset Group's work order concentration provided unfair benefits to the controlling family and sent a review report stating the need for corrective orders and surcharge imposition to Mirae Asset Group, submitting it to the plenary meeting.

Attention is focused on the final conclusion of the over two-year-long suspicion of work order concentration by Mirae Asset Group. Depending on the level of sanctions, the issuance of promissory notes and the comprehensive investment account (IMA) business promotion by Mirae Asset Daewoo will be determined. If the sanctions are confirmed at the level of corrective orders and surcharge imposition, it is expected that the issuance of promissory notes business and IMA business re-promotion will accelerate. Previously, Mirae Asset Daewoo was designated as a large comprehensive financial investment business operator in November 2017 and applied for approval of the promissory notes business, but the review was put on hold due to the Fair Trade Commission's investigation. If prosecution is filed, the promissory notes approval review will be delayed by about six months again. The Financial Services Commission announced in June last year the 'Financial Investment Business Licensing System Reform Plan to Support Innovative Growth,' deciding to resume the review if the matter under investigation by the prosecution is not prosecuted within six months and is not a serious crime such as violation of the Act on the Aggravated Punishment of Specific Economic Crimes.