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| Meritz Asset Management CEO John Lee / Yonhap |
By Anna J. Park
The Financial Supervisory Service (FSS) has been conducting investigations into Meritz Asset Management CEO John Lee over allegations that he violated a conflict of interest obligation when making an investment decision for his firm.
According to the FSS, it carried out on-site inspections into the asset management company from May 23 to June 7.
Although the FSS said it could not give any further details other than confirming that the investigation is still ongoing, the financial regulator is known to have launched the investigation as it had received a tip that Lee had led his company to invest into a local peer-to-peer (P2P) real estate company for which his wife is one of the shareholders.
Lee's wife had allegedly invested 200 million won ($155,000) for a 6.57 percent stake in the P2P real estate company, which was founded by Lee's acquaintance in 2016.
After his wife obtained the stake in the company, Meritz Asset Management set up a private equity investment fund in 2018, investing 6 billion won into a product of the P2P company. Lee is also chair of the asset management firm's investment deliberation committee.
The financial authority's ongoing investigation is reportedly focusing on whether the asset management firm's decision to invest in a product of the company, where the wife of the asset management firm's head is one of the shareholders, violates the conflict of interest obligation stipulated in the Capital Market Act.
Some raised questions about whether Lee might have assumed his wife's identity to acquire the stake in the P2P company in the first place, meaning that he invested with a borrowed name. The current investigation would also look into the source of the invested money to clarify whether it came from Lee's wife or Lee himself.
Regarding such questions, Meritz Asset Management said there's nothing illegal about the investment by Lee's wife, adding that the firm submitted all the related materials to the financial authority.
In a media interview, Lee also denied the allegations, while acknowledging the facts that his wife is a shareholder of the P2P company, that his acquaintance is the founder of the company and that Meritz Asset had invested in the company.
"It does not constitute a conflict of interest nor an illegal investment," he said in the interview, saying that the total amount of money invested by Meritz Asset into the P2P company accounted for less than 1 percent of its revenue. "The investigation began due to the lies of those who wish to slander me," he said.
A veteran fund manager who built up a successful career in the U.S. before returning to Korea in 2014 to lead Meritz Asset Management, Lee has been dubbed the "godfather of small sum investors" as he preached about his trust in stocks as the best investment tool, leading many small investors here into the stock market. His YouTube channel has over 470,000 subscribers.
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