Cho Kuk Calls Single-Stock Leveraged ETF Rollout a Policy Failure, Seeks Accountability

“Ruling Democratic Party Is Silent, So I’m Speaking as the Red Team”

Cho Names Kim Yong-beom, Yoon Chang-ryeol, Lee Eok-won and Lee Chan-jin in Accountability Call

“The Government Should Invest in Young People, Not Urge Them to Buy Stocks”

Cho Kuk, head of the Innovation Policy Institute of the Rebuilding Korea Party, called the single-stock leveraged exchange-traded fund, or ETF, episode a “clear policy failure” and demanded accountability from policy officials, including Kim Yong-beom, the presidential chief of staff for policy.

In a social media post on Aug. 5, Cho wrote that he was speaking from the position of a “red team” because the ruling Democratic Party had remained silent. The government’s introduction of single-stock leveraged ETFs, he wrote, was a clear policy failure.

He described the episode as a failure of state-led finance. The current situation, he said, was the result of interventionist financial policymaking by the government’s core officials led by Kim, including the presidential policy office, the Office for Government Policy Coordination, the Financial Services Commission and the Financial Supervisory Service.

Cho also questioned how the products were introduced. Experts had warned the launch was too rushed, he wrote, but the presidential policy chief pushed for the products and built momentum for their debut. Sixteen single-stock leveraged ETFs were then launched before the June 3 election.

After the election, on June 22, Financial Supervisory Service Governor Lee Chan-jin said the launch should have been blocked outright, according to Cho. That, he wrote, makes the policy decision process impossible to view as anything other than a mystery.

Cho also said young investors suffered heavy losses. He cited data showing that 62% of forced-liquidation accounts belonged to people age 35 or younger. Young people who invested trusting government policy suffered major losses, he wrote, and such a clear failure of state-led finance cannot simply be brushed aside.

He also called for policy officials to be held responsible. Accountability should be established for Kim, Yoon Chang-ryeol, head of the Office for Government Policy Coordination, Lee Eok-won, chair of the Financial Services Commission, and Lee Chan-jin, governor of the Financial Supervisory Service, he wrote.

Cho said the entire process must be examined, from what he called an inexplicable rollout to delayed responses that worsened investor losses and ineffective stopgap measures. Those responsible, he wrote, must be held to account.

He also said the Office of Senior Presidential Secretary for Civil Affairs should inspect those involved in the episode, adding that the view was based on his own past experience serving in that post.

Such a step is also necessary for the success of the Lee Jae-myung administration, Cho wrote. It would also answer the anger of people suffering devastating losses from forced liquidations.

The government should return to the original goal behind its call for a “Kospi 5000 era,” he wrote. Rather than urging young people to invest in stocks, the government should become one that invests in young people.

Shin Hyun-bo, Hankyung.com reporter greaterfool@hankyung.com