South Korea’s Mirae Asset Securities issued an apology to clients on Monday after it was left without an allocation of SpaceX shares from the U.S. company’s IPO, saying the decision to exclude the brokerage from the final allotment came down to the U.S. lead underwriter.
In a letter sent to customers, Mirae Asset Securities co-chief executives Kim Mi-seob and Heo Sun-ho wrote that the firm had been qualified to offer SpaceX stock to Korean investors and had acted as one of the underwriting banks for the offering. Despite those positions, the letter said, the brokerage ultimately received no allocation when the lead underwriter in the United States exercised its final, discretionary decision-making authority.
The letter recounted that Mirae Asset made "every effort until the very end to secure an allocation of shares. However, due to the discretionary final decision made by the lead underwriter in the United States, no shares were ultimately allocated to us." It added that the firm was probing the circumstances that led to that outcome.
The brokerage also told clients it was "deeply disappointed and sincerely sorry to all customers who placed their trust in Mirae Asset Securities and participated in this offering," and that it would consider financial compensation for investors affected by the lack of allocation.
Earlier this month Mirae Asset collected roughly $500 million in subscription deposits from clients who participated in a private placement tied to the IPO. The offering was structured in two tranches, and the letter noted those tranches sold out within minutes, according to a person familiar with the matter.
SpaceX’s public market debut on Friday pushed the company’s valuation past $2 trillion, a milestone that coincided with a surge in market value for shares tied to the listing and has been widely reported to have materially increased the net worth of the company’s largest shareholder.
When queried about the allocation outcome, banks involved in the SpaceX IPO, including Goldman Sachs, Morgan Stanley, Bank of America and JPMorgan Chase, did not immediately respond to requests for comment outside Asian working hours. Citigroup declined to comment.
The episode has left some investors who converted funds into U.S. dollars to meet the subscription deposits incurring exchange fees and bearing the effects of recent foreign exchange movements. Regulators in South Korea are reported to be reviewing the case; officials plan to scrutinize investor protection measures, including whether the brokerage adequately warned clients about the possibility that an allocation might not be confirmed.
Context and next steps
Mirae Asset has said it is investigating the lead underwriter’s decision-making and weighing whether to provide compensation to those who participated in the placement but received no shares. The scope and timeline of any remediation were not detailed in the client letter.
The matter has drawn attention from market participants and watchdogs, who are expected to examine disclosures and the handling of subscription funds, as well as the communication provided to investors prior to and during the offering.
Key details repeated in the client notice
- The brokerage was qualified to offer SpaceX shares to Korean investors and served as an underwriter but received no final allocation.
- Mirae Asset collected about $500 million in subscription deposits across two tranches that sold out quickly.
- The firm said it will investigate the circumstances and consider financial compensation for affected investors.