"Trusted Jon Bong-jun..." Donghak Ants 'Shocked' by CEO John Lee's Illegal Investment Allegations (Comprehensive)

John Lee, CEO of Meritz Asset Management.

[Asia Economy Reporter Hwang Sumi] John Lee, CEO of Meritz Asset Management, known as the vanguard of the Donghak Ant Movement and a stock investment evangelist, has reportedly undergone an on-site inspection by financial authorities. The investigation aims to examine allegations that he made illegal investments under his wife's name in a company owned by an acquaintance and to determine any conflicts of interest. While the CEO's side has acknowledged the investigation, they deny the related allegations.

CEO John Lee worked as a fund manager at Skudder Stevenson & Clark on Wall Street in the U.S. and Lazard Asset Management before returning to Korea. Since 2014, he has served as the CEO of Meritz Asset Management. Through various broadcast programs and public lectures, he has emphasized the necessity of long-term stock investment to the general public and encouraged participation. He is well known within and outside the securities industry as an evangelist of value investing.

He is especially regarded as a leading figure encouraging domestic individual investors, known as Donghak Ants, to invest in stocks. Some investors even call him 'Johnbongjun' (John Lee + Jeon Bong-jun), meaning the vanguard leading the Donghak Ant Movement.

However, recently, CEO John Lee has been embroiled in allegations of nominee investment. It is alleged that he invested about 6% of shares in P Company, a real estate-related online investment-linked finance (P2P) company established by an acquaintance in 2016, under his wife's name. Nominee investments by employees of financial investment firms are known to violate the Capital Markets and Financial Investment Business Act (Capital Markets Act).

Particularly problematic is the fact that Meritz Asset Management operated funds that invested in P Company. It has been pointed out that Meritz Asset Management launched a fund named 'Meritz Marketplace Lending Specialized Private Investment Trust' in 2018, two years later, and invested the entire 6 billion KRW fund amount into P Company's real estate P2P products.

According to the financial investment industry on the 19th, the Financial Supervisory Service (FSS) received such reports and conducted an inspection of Meritz Asset Management from May 23 to June 7. They are currently investigating whether any laws were violated based on the on-site inspection findings. This FSS inspection is known to be an ad hoc inspection targeting specific issues rather than a regular inspection.

Within the financial sector, there is an interpretation that the asset management company CEO pursued private interests using fund management money. The FSS is reportedly focusing on whether CEO John Lee's nominee investment occurred, particularly examining if investing the company's fund in a product of a company operated by an acquaintance of the CEO and with the CEO's spouse as a shareholder constitutes a conflict of interest.

Meanwhile, CEO John Lee's side has stated that they have sufficiently explained the allegations to the supervisory authorities. Regarding the suspicion of private interest pursuit, they emphasized that for such allegations to hold, the fund would have to incur losses, but the fund generated an annual return of about 12%, indicating no insolvency.