[2025 National Audit] Korea Securities Finance Faces Controversy Over Investment in Capital-Eroded IMS... Criticism Over 'Distortion of Public Signal'

Kang Junhyun: "Korea Securities Finance's Investment in IMS Sent the Wrong 'Safety Signal' to the Market"
Calls Out Financial Services Commission for Heavy Public Responsibility
Urges Comprehensive Review of Korea Securities Finance's Investment Screening and Risk Management

Congressman Kang Junhyun is questioning at the Financial Services Commission's audit.

On October 20, Congressman Kang Junhyun of the Democratic Party of Korea (Sejong-eul) pointed out during the National Assembly audit of the Financial Services Commission, Korea Development Bank, and Industrial Bank of Korea that "it was a clear failure of judgment for Korea Securities Finance, a public financial institution, to invest 5 billion won in a company with capital erosion," and criticized that this action "sent the wrong signal to the (financial) market."

According to the data presented by Congressman Kang, IMS Mobility is a rental car company reportedly established with the involvement of Kim Yesung, known as a close associate of Kim Keonhee. Despite being in a state of complete capital erosion, IMS Mobility attracted a total investment of 18.4 billion won from nine companies, including Kakao Mobility, HS Hyosung, and Shinhan Bank. Among these, Korea Securities Finance made the largest single investment of 5 billion won, and it was found that 4.6 billion won of this amount was funneled into a shell company under Kim Yesung’s name.

Korea Securities Finance is the only dedicated securities finance company in South Korea, serving a public role by supplying funds and securities, as well as managing deposits, to stabilize the capital market and protect investors.

Congressman Kang stated, "Investments by such institutions act as a 'public guarantee signal' in the market," and criticized, "As a result, public trust was effectively granted to an insolvent company."

He further explained, "IMS was already in a state of severe capital erosion at the time of investment, and its financial situation has only worsened since. Korea Securities Finance claims the investment was sound based on a return to profitability, but this only reflects short-term profit and loss, not a recovery in the company’s financial health." He added, "The Financial Supervisory Service’s inspection revealed a lack of detailed investment review standards, no risk limits, failure to separate duties, and reinvestment in loss-making borrowers, exposing overall deficiencies. As a public financial institution, Korea Securities Finance’s internal control system was essentially nonfunctional."

He particularly pointed out that the IMS investment proposal was the only case among 95 investments over the past three years to receive a partially favorable opinion, yet the opposing view-which conservatively assessed the feasibility of the company’s growth plans-was ignored, and the 5 billion won investment was approved in just 30 minutes, making it more of a hasty decision than a thorough review.

Korea Securities Finance has argued that the investment was safe due to excessive safeguards such as senior structure, put options, and tag-along rights, but Congressman Kang asserted that this actually indicates they viewed the likelihood of failure as high.

He stated, "A normal growth company would have no reason to require such mechanisms. This was an abnormal investment structure focused on loss mitigation."

He emphasized, "Korea Securities Finance is, in effect, a public financial institution, and every investment decision it makes affects market trust. If it sends the wrong safety signals to insolvent companies, the resulting harm ultimately falls on the public."

In response, the chairman of the Financial Services Commission replied, "This matter is currently under investigation, and if any illegality is uncovered during the investigation, strict action will be taken."