Police have escalated the investigation into Korea Investment Trust Management (KITM) over allegations it misled investors by claiming it would include SpaceX IPO shares in an exchange-traded fund (ETF) when it had not secured the shares. On April 15, the Yeongdeungpo Police Station transferred the fraud case to the Seoul Metropolitan Police Agency's Financial Crime Investigation Unit, which will examine whether KITM made false statements in selling and advertising the product and whether deceptive practices influenced investor decisions.
The controversy centers on KITM's marketing that highlighted the potential inclusion of shares in unlisted space company SpaceX's IPO in a certain ETF, a product designed to track a specific index. KITM emphasized that such IPO shares, which could yield relatively high returns, would be part of the fund. However, the actual allocation process fell short. Out of 555,555,555 SpaceX Class A common shares originally planned, 2,314,815 shares were to be allocated to Mirae Asset Securities. But lead underwriter Goldman Sachs ultimately did not assign sellable shares to Mirae Asset Securities and other syndicate members in the final allocation stage.
As a result, KITM could not include the SpaceX shares in the fund. For investors, a key asset touted as a basis for expected returns was not actually included, raising questions about the gap between the advertising claims and the investment reality. Since ETFs are easily tradable like stocks and popular among retail investors, explanations about intended assets can directly affect investment decisions. The Yeongdeungpo Police Station began its investigation last month after receiving a complaint via the e-People system.
This case may set a precedent for how asset management firms can definitively communicate investment possibilities or inclusion plans, and what language is permissible in marketing overseas unlisted companies. The investigation is likely to focus on the specificity of the actual advertising statements, how KITM internally assessed the likelihood of securing the IPO shares, and whether sufficient risk warnings were provided to investors.