Regulator examines investor protection, marketing practices after Korean funds fail to secure IPO shares People gather to watch a live feed with SpaceX CEO Elon Musk on the day of SpaceX's initial public offering at the Nasdaq MarketSite in New York City on Friday. Reuters-Yonhap South Korea's Financial Supervisory Service is examining Mirae Asset Securities and several asset managers, including Korea Investment Management, over SpaceX-related investment products after they failed to secure IPO allocations despite marketing them as vehicles for gaining exposure to the highly anticipated listing.According to industry sources Tuesday, the FSS initially launched an on-site inspection of Mirae Asset Securities before escalating it into a formal examination. The probe also covers investor protection issues surrounding the failed allocation process, which has already triggered a wave of investor complaints.The examination initially focused on how individual and corporate investors were registered as professional investors, a status that allows participation in overseas IPO offerings but exempts firms from certain investor-protection requirements under the Financial Consumer Protection Act. A key issue is whether investors were adequately informed of the risks involved.Scrutiny intensified after investors received no IPO allocations in SpaceX's blockbuster market debut last week despite aggressive marketing linked to the offering. Questions have since emerged over whether firms adequately disclosed the risk of receiving no shares and whether promotional materials created unrealistic expectations of access to the stock.Mirae Asset Securities' marketing campaign and internal controls have also come under the spotlight. The brokerage conducted a firmwide subscription drive, while Chairman Park Hyeon-joo publicly expressed expectations of securing a substantial allocation and broad investor participation.The controversy has expanded to costs incurred during the subscription process. Ahead of the deadline, investors converted large sums into dollars, paying foreign-exchange fees and, in some cases, suffering currency-related losses. Mirae Asset Securities reportedly charged a 5 won per dollar exchange fee, equivalent to roughly 500,000 won ($332) on the minimum $100,000 subscription amount.Marketing by asset managers has also drawn scrutiny. Korea Investment Management promoted its ACE US Space Tech Active ETF as providing exposure to SpaceX at the IPO price, highlighting "direct participation in the IPO," "immediate inclusion after listing," and "the largest SpaceX weighting."The promotions were followed by a sharp increase in retail inflows. Korea Investment Management's ETF drew 252 billion won in net retail purchases this year, including about 60 billion won over three trading days after the SpaceX IPO announcement. Mirae Asset Global Investments' TIGER US Space Tech ETF also saw retail demand surge, with cumulative inflows nearing 3 trillion won this year.However, neither fund secured IPO allocations. Some managers later purchased SpaceX shares in the secondary market at prices roughly 20 percent above the expected $135 IPO price.Investors who bought the funds after viewing the promotional materials have filed complaints with regulators and through the government's online petition platform, while some have begun discussing collective action and potential legal disputes."Even if asset managers disclosed in advance that they might not receive an IPO allocation, the issue could still be considered misleading or exaggerated advertising," an FSS official said. "We are reviewing the matter together with the inspection department."