Yoo Seong-min says Cheong Wa Dae bears responsibility for Samsung-Hynix leveraged ETF push

Former People Power Party lawmaker Yoo Seong-min urged the National Assembly to launch an immediate parliamentary investigation into the controversy surrounding single-stock leveraged ETFs, saying those responsible for the policy failure must be held accountable.

Yoo wrote on Facebook on Sunday that "the responsibility for pushing through the Samsung Electronics and SK Hynix single-stock leveraged products lies with Cheong Wa Dae, and the ones who suffered the harm are the investors," adding that "this is not the time for the president to tell Financial Supervisory Service chief (Lee Chan-jin) 'you've been taking a lot of heat' as if watching a fire from across the river."

He said he was left speechless by what he called the irresponsibility and "out-of-body" detachment of the FSS chief, who — after countless retail investors cried out that they were living through hell in what had become a speculative free-for-all — belatedly said he "reflects and regrets not having stopped it back then, even by lying down in protest." Yoo added that the FSS chief "appears to feel wronged, since he is not the ringleader but merely a subordinate."

Yoo went on to say that "the 'back then' the FSS chief referred to was last January, and it is widely known that the target he should have stopped 'even by lying down in protest' was the presidential policy chief."

"The cause of and responsibility for this policy failure must be established," Yoo said. "The National Assembly must immediately conduct a parliamentary investigation to determine who introduced these high-risk leveraged products into a stock market where the two companies — Samsung Electronics and SK Hynix — account for more than 50 percent of total market capitalization, and what goal they had in doing so."

Yoo also said the national pension fund's decision to raise its domestic equity allocation from 14.4 percent to 20.8 percent, while keeping the permitted range for its strategic asset allocation undisclosed, had undermined the fund's rebalancing principles. "Allegations that the pension fund was mobilized to artificially prop up share prices and defend the exchange rate must also be confirmed through a parliamentary investigation," he urged.

Yoo said that without correcting the problems surrounding the Samsung Electronics and SK Hynix single-stock leveraged ETF situation and the breach of the national pension fund's asset management principles, "a sound capital market will remain a distant goal, and the damage will fall on domestic investors," reiterating his call for a parliamentary investigation.