Watchdog launches probe into Mirae Asset Securities over SpaceX IPO allocation debacle

Financial Supervisory Service (FSS) Gov. Lee Chan-jin speaks during a press conference at FSS headquarters in Seoul, Monday. Yonhap

The fallout from the SpaceX “zero shares” fiasco has prompted authorities to investigate Mirae Asset Securities and several other investment management firms. This comes after a Korean allocation of 2.31 million shares was withdrawn without explanation June 12, just hours before the Elon Musk-led company’s blockbuster initial public offering (IPO).

Financial Supervisory Service (FSS) Gov. Lee Chan-jin said Monday that authorities are reviewing both the circumstances surrounding the disputed allocation process and possible safeguards to prevent a similar episode when future high-profile listings such as OpenAI or Anthropic come to market.

The remarks come as the watchdog sifts through a growing number of investor complaints linked to the offering.

Ahead of SpaceX’s June 11 IPO, Mirae Asset Securities marketed $500 million worth of stock to local investors. Regulatory filings it had published before subscriptions opening showed that the brokerage had secured an allocation of over 2.31 million shares, giving investors a rare chance to participate in the offering at the $135 issue price.

But just five hours before trading began, Goldman Sachs, the lead underwriter, informed the country’s syndicate members that the entire Korean allotment had been canceled, with no public explanation.

SpaceX executives and guests celebrate at the Nasdaq MarketSite in New York City, June 12, the day of SpaceX's initial public offering. Reuters-Yonhap

Lee said regulators had not anticipated that outcome, particularly after the allocation had been disclosed in the company’s U.S. Securities and Exchange Commission filings.

“The possibility of something like this happening never even crossed our minds. Even now, I still find it difficult to understand. The money had already been collected and converted into dollars. As far as we knew, everything was ready to go,” he said.

“It remains unclear whether the episode was the result of a communication breakdown between Mirae Asset and the global investment banks involved in the deal or from other factors. That is something the inspection will need to determine.”

The FSS has since launched an open-ended inspection of Mirae Asset Securities to establish what led to the failed allocation. The review will also examine whether the brokerage complied with investor protection requirements, adequately disclosed the risks associated with overseas offerings and properly shared information regarding allocations from foreign underwriters.

Separately, the governor said the watchdog has received numerous complaints related to exchange-traded funds (ETF) tied to SpaceX, particularly over how the funds determined whether and when the stock would be included in their portfolios.

The FSS plans to conduct an on-site inspection of a separate asset management firm, the identity of which was not disclosed, on Wednesday over allegations that it overstated the likelihood of SpaceX’s inclusion in an ETF. Authorities will also examine whether the fund purchased the stock before it was officially added to the benchmark index, potentially breaching the index’s rules.

With mega-listings, including for OpenAI and Anthropic, expected in the coming months, authorities are exploring ways to prevent a repeat of the SpaceX allocation debacle.

“Some market participants have requested us to introduce exceptions to accommodate differences in disclosure requirements across jurisdictions, arguing that such mismatches can complicate cross-border offerings. But as of now, we remain cautious about carving out special rules,” Lee said.

Instead, the financial watchdog is mulling over publishing clearer guidance on the procedures that financial firms are expected to follow when marketing overseas IPOs to Korean investors, with the aim of improving transparency and making outcomes more predictable.

It is also reviewing ways to make the allocation process more transparent and reduce the risk of future disputes over how shares are distributed, including concerns that individual underwriters may wield too much influence over final allocations. More broadly, Lee said authorities are considering additional safeguards to ensure that market-specific allocation limits do not automatically determine how shares are ultimately distributed.