Mirae Asset Securities Co., a brokerage unit of Mirae Asset Financial Group, has come under scrutiny for suspected unregistered practice in selling securities backed by Keangnam Hanoi Landmark Tower in Vietnam that attracted 250 billion won ($223 million) from nearly 500 retail investors through private recruitment.

According to investment industry sources on Tuesday, the Financial Supervisory Service (FSS) is conducting an on-site investigation to look into whether Mirae Asset Securities breached FSS security issuance rule when selling securities backed by the building in Hanoi dubbed Keangnam Landmark 72. The investigation, which was initially scheduled to end by the end of August, is reported to run until early September.

Mirae Asset Securities in April invested 400 billion won, or 300 billion won in senior loans collateralized by the Keangnam Landmark 72 building in Vietnam. It created special purpose vehicles and designed six-month asset-backed securities based on the asset, offering investors fixed yield of 4.5 percent per annum. The short-term product was an instant hit as it offers returns three or four times bigger than bank savings.

To meet the explosive demand, it created 15 special purpose companies (SPCs) and sold the product to about 500 individuals with each SPC drawing 35 investors. Privately-recruited funds can be sold up to 49 investors.

Under the FSS rule, a fund design must come under review and be fully registered with the financial authorities when recruiting 50 investors or more.

But the Vietnamese ABS did not register with local authorities.

An unnamed Mirae Asset Securities official denied any wrongdoing, saying additional SPCs were created to meet high demand for the low-risk and reliable investment.

By Choi Jae-won

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