Commercial buildings stand illuminated at dusk in Hong Kong, Dec 27, 2018. (JUSTIN CHIN / BLOOMBERG)
South Korea’s financial regulators are looking into a Hong Kong-based hedge fund that has halted withdrawals from some of its funds by Korean investors, according to people familiar with the matter.
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The Financial Supervisory Service is reviewing the suspension of client redemptions totaling at least 647 billion won (US$536 million) by Gen2 Partners Ltd, founded by Kyle Shin, the people said. The frozen funds are part of Gen2’s KS Asia Absolute Return Fund, KS Korea Credit Fund and CM Credit Fund, according to the people, who are not authorized to speak publicly on the matter.
South Korean investors’ combined exposure to funds run by Gen2 Partners was around 1.08 trillion won, according to an official at the Financial Supervisory Service
Several distributors of the funds in Seoul have received notifications on the suspension of withdrawals. The Korean financial watchdog is trying to reach Shin for details on the current situation and it may seek cooperation of local authorities in Hong Kong if it fails to talk to him, said one of the people.
Gen2 Partners declined to comment.
South Korean investors’ combined exposure to funds run by Gen2 Partners was around 1.08 trillion won, according to an official at the FSS. Local media including Yonhap News reported earlier on the withdrawal halt of Shin’s funds.
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South Korean regulators, burned by scandals tied to complicated and risky financial products, are planning to look at all of the nation’s homegrown asset management companies handling private funds. The pandemic-driven market volatility has also made investments more difficult, leading to at least US$62 billion of global mutual funds suspending redemptions this year as of end-May, already at the highest in 10 years, Fitch Ratings said in a report last month.
Shin founded Gen2 Partners in Hong Kong after working as the South Korea research office head of Kingdon Capital Management LLC.
