Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
What changes will prosecutor-turned-FSS chief bring?
Financial Supervisory Service (FSS) Governor Lee Bok-hyun speaks during his appointment ceremony held at FSS headquarters in Seoul, Tuesday afternoon. Courtesy of FSS
By Anna J. Park
Lee's leadership to strengthen FSS' law enforcement roles
By Anna J. Park
Former chief prosecutor Lee Bok-hyun's appointment as the head of the Financial Supervisory Service (FSS) is an unprecedented case in many regards. First, he is the first-ever FSS governor to have been a prosecutor before assuming the chief role at the financial authority. Born in 1972, he is also the youngest-ever FSS governor ― he's even younger than most of the directors at the financial supervisory institution.
These two facts about the FSS' 15th governor are making market watchers expect considerable changes in the supervisory agency. Given his specialty in investigating financial and tax crimes, the FSS is expected to strengthen its investigative and punishment-related roles. The new chief's relatively young age in the conservative financial institution is also expected to bring generational changes and innovative approaches in work processes.
Since the FSS' founding in 1999, the 14 previous governors were mostly veteran public officials with extensive experience either at the finance ministry or the Financial Services Commission, though there were some exceptional cases of lawmakers, professors or figures from the private financial sector taking the post.
Yet, this is the first time that a former prosecutor has taken the position during the FSS' more than two decades of history. Lee, who's also a certified public account (CPA), had been involved in various investigations into major economic and financial crimes as prosecutor, including Samsung Biologics' accounting fraud and Lone Star's controversial acquisition and sell-off of Korea Exchange Bank.
“I think Lee's taking the post is appropriate, given the series of major financial fraud cases in recent years such as the Lime and Optimus fund fiascos that wreaked havoc on numerous retail investors,” a financial industry watcher said on condition of anonymity.
“However, there is concern in the industry that the new chief might be too focused on penalizing the industry, rather than nurturing the financial sector.”
FSS Governor Lee Bok-hyun, left, enters FSS headquarters on Yeouido in Seoul, Wednesday morning. Yonhap
President Yoon Suk-yeol, meanwhile, strongly defended his appointment, saying Lee is suitable and qualified to lead the FSS.
“With his long career of investigating financial crimes, Lee is an expert in financial supervisory regulations and market investigations,” President Yoon told reporters on Wednesday. “As a regulation supervisory institution, the FSS is obligated to carry out tasks in a predictable manner, based on due process and clear legal standards. Thus, people with expertise in law enforcement are suitable leaders at such agencies.” Yoon added that professionals with legal qualifications and experience are widely known to advance in politics and government in other developed countries like the U.S.
Mixed reactions to Lee's appointment
Lee's appointment to the post also reflects the Yoon administration's strong determination to curb financial and stock crimes. The justice ministry's recent revival of the Financial and Securities Crime Joint Investigation Team, which was disbanded two years ago under the Moon administration, also shows that the Yoon administration is serious about cracking down on financial crimes. With Lee heading the FSS, collaborative investigations into financial crimes among related ministries would become more efficient.
The new FSS leadership is also expected to influence the recent strings of legal battles between financial companies and the FSS over the financial authorities' sanctions and penalties. As a more stringent legal approach is demanded on the part of the financial authorities, with diverse financial companies disobeying the authorities' decisions through recent legal suits, Lee's extensive law enforcement experience is expected to provide necessary guidance to the FSS' supervisory role.
However, the new FSS chief doesn't seem to be stressing such roles by the FSS for now. In a speech made at his appointment ceremony on Tuesday afternoon, Lee said he would prioritize stabilizing financial markets and securing consumer protection. Regarding the markets' concern that too much weight is put on penalizing the sector rather than taking a market-friendly approach, the new governor said he's more focused on creating a predictable supervisory system and removing consumer inconveniences.
“I haven't yet determined that the FSS' new direction would be a strengthening of post-control investigations. I basically think private financial companies' autonomy and innovation are paramount,” Lee told reporters on Wednesday. “Yet, the nature of the financial industry requires regulation at some degree. From the perspective of providing financial supervisory services, I will aim to create a predictable supervisory system for financial companies, so that consumer inconvenience could be removed.”
The new FSS chief also said he would review the Lime and Optimus cases, to see whether they require further deliberation.