South Korean Presidential Office Policy Chief Kim Yong-beom Criminally Reported Over Rushed Leveraged ETF Push

Kim Yong-beom, policy room director at South Korea's presidential office, is facing multiple criminal charges including abuse of authority, coercion, and obstruction of business through intimidation, over allegations that he abused his position to forcibly push through the listing of high-risk leveraged exchange-traded funds (ETFs) linked to individual stocks.

Former Seoul city councilor Lee Jong-beum formally submitted a report to the Supreme Public Prosecutors Office on Monday (the 3rd), accusing Kim of publicly pressuring financial regulators, resulting in severe market volatility and substantial losses for investors.

According to the report, in a January media interview, Kim questioned: "If Nasdaq can do it, why can't South Korea?" This remark has been widely interpreted as a direct instruction to financial authorities. Subsequently, the Financial Services Commission (FSC) significantly accelerated its original plan—scheduled for the second half of the year—and hastily launched 2x leveraged ETFs tracking Samsung Electronics and SK Hynix on May 27, just ahead of local elections.

Lee pointed out that despite warnings from industry players, experts, and even internal FSC risk assessments about the high risks of 'negative compounding effects' in volatile markets, the government pushed forward regardless. After listing, these products amplified stock price swings in Samsung and SK Hynix—two major market drivers—thereby affecting the overall KOSPI index and causing tens of billions of dollars in losses for retail investors. Lee characterized this as "state-led stock price manipulation."

The incident has become a focal point of political debate in South Korea. The opposition People Power Party (PPP) is strongly demanding a parliamentary investigation into the approval process and questioning whether the government aimed to create a false impression of stock market prosperity ahead of national elections. Under public pressure, the presidential office has held closed-door meetings to discuss countermeasures.

Currently, financial authorities have completely suspended new listings and advertising of such products and raised the minimum cash deposit requirement for retail investors from 10 million won to 30 million won to strengthen protective measures.

While prosecutors have not yet formally opened an investigation, the core of any future inquiry will center on whether statements from the presidential office constituted legally binding 'instructions' and whether there is a direct causal relationship between the product launch and investor losses.