Jang Dong-hyuk on Lee's Leveraged ETF Remarks: "If He Was Briefed, He's an Accomplice"

[Financial News]  Jang Dong-hyuk, leader of the People Power Party, on the 21st called for a full investigation into the policy-making process after President Lee Jae Myung said he had been briefed when single-stock leveraged exchange-traded funds (ETFs) were introduced, arguing, "If he was briefed, he's an accomplice."
Jang made the claim at a supreme council meeting held at the National Assembly, referring to President Lee Jae Myung's press conference on the 18th.
At the press conference, President Lee said, "Regarding the introduction of leveraged ETFs, I was also briefed at the time." However, he added, "I have not yet grasped the details of the procedures or how the decision was made," and said, "Someone must have made the decision." Lee acknowledged that there had been shortcomings in the policy design, saying, "It appears there were shortcomings."
Targeting these remarks, Jang said, "Even so, President Lee said, 'Someone must have made the decision,' as if he were talking about somebody else's business." He added, "The public suspects that that someone was the president."
Jang also questioned whether sufficient risk checks had been conducted during the introduction of single-stock leveraged ETFs. He claimed, "Even verification procedures such as stress tests have disappeared," adding, "The stock market has become a gambling den, and the damage to the public amounts to 54 trillion won."
The 54 trillion won figure is an estimate that the People Power Party previously presented as the scale of losses suffered by individual investors from investing in single-stock leveraged ETFs. On the 3rd, lawmakers from the People Power Party serving on the National Assembly's Political Affairs Committee said, "Estimates indicate that losses suffered by individual investors may have reached approximately 54 trillion won," and announced that they would pursue a parliamentary investigation to determine the policy-making process and responsibility.
Financial authorities explained that the introduction of single-stock leveraged and inverse products in May followed concerns that investors could access such products in overseas markets, including the United States and Hong Kong, but not in South Korea because of diversification requirements, causing investment demand to flow overseas. At the time, the authorities also warned investors that the products carried a greater risk of losses than ordinary ETFs.
Jang again emphasized that the entire introduction process should be investigated, also raising allegations that Kim Yong-beom, the former policy chief of the Presidential Office, had intervened in the policy.
The People Power Party is already pursuing a parliamentary investigation into the introduction of single-stock leveraged ETFs. The opposition says the investigation should determine what roles Cheong Wa Dae, the Office for Government Policy Coordination, the Financial Services Commission, and the Financial Supervisory Service played in the policy-making process, as well as how much information was reported to the president.

[email protected] Kim Kyung-min Reporter