Private equity minimum capital tripled to 300 million won
The minimum required capital for private equity funds will be raised from 100 million won ($89,400) to 300 million won, after a law was amended Tuesday.
For funds with leverage of more than 200 percent, the minimum capital now has to be 500 million won.
The funds will have to record their explanations of complex products to their customers, and customers will be given a two-day grace period, in which they are allowed to back out of the investments if they have second thoughts.
Risky products are those with the potential to lose 20 percent of the principal investment.
The fund distributor will be banned from intervening in the operations of the fund management firms.
The amendments were to Financial Investment Services and Capital Markets Act.
The changes were made after the derivative-linked funds controversy in 2019, which left many investors, especially the elderly, suffering huge losses.
The relaxing of the regulations, which the authorities hoped would lead to an expansion in the financial markets, may have created an environment where mis-selling was more likely to occur.
In 2015, the minimum capital was lowered from 500 million won to 100 million won.
BY LEE HO-JEONG [email@example.com]