South Korea’s Financial Supervisory Service (FSS) has expanded its review of Mirae Asset Securities Co. to investigate the brokerage’s failure to secure an allocation of SpaceX shares during the company’s initial public offering (IPO), according to individuals familiar with the matter.

Mirae Asset, one of the underwriters for Space Exploration Technologies Corp.’s IPO, had offered its professional investor clients access to the stock through a private placement. However, despite accepting deposits, Mirae ultimately received no shares in the offering. The FSS had initially begun examining whether the investors who subscribed met the eligibility criteria for registered professional investors in South Korea, where retail investors were excluded from participating in the SpaceX IPO, consistent with most Asian markets.

The watchdog widened the scope of its inspection after Mirae Asset’s failure to obtain any allocation became clear, raising concerns over the brokerage’s handling of commitments to its clients. Demand for the SpaceX shares was highly robust. The brokerage’s initial $300 million tranche sold out in under a minute, with minimum investments set at $100,000 and a maximum cap of $3 million per investor. Mirae had planned to launch a second $200 million tranche on June 8 but faced difficulties following the allocation failure.

The fallout impacted not only individual investors but also local asset managers. Korea Investment Management Co. disclosed it had purchased SpaceX stocks on the secondary market after the shares began trading on June 12 and included them in its ACE U.S. Space Tech Active exchange-traded fund (ETF), which holds about $206 million in assets with SpaceX representing roughly 26% of its portfolio. The ETF saw an 11% decline on Monday after gaining 10% on the stock’s first trading day.

Korea Investment acknowledged that it had promoted participation in the SpaceX IPO based on expectations informed by Mirae Asset. It was notified on June 13 that the lead global underwriter had decided to allocate no shares to the entire Korean underwriting group due to exceptionally strong demand from global institutional investors. “It was clearly our mistake to create excessive expectations and conduct marketing activities before the allocation was finalized,” the firm said in a statement.

SpaceX shares opened at $150, above the IPO price of $135, and surged over 30% intraday before closing up 19% at $160.95 on the first day of trading.

South Korean regulations distinguish between private and public offerings primarily based on the number of investors solicited and their status. If fewer than 50 investors are involved, the offering is generally considered private, while offerings to 50 or more require filing a securities registration statement. However, if shares are sold exclusively to qualified professional investors, issuers may be exempt from certain public offering regulations even when 50 or more investors participate.

Mirae Asset Securities declined to comment on the ongoing investigation. Meanwhile, Mirae’s stock price fell 1.3% in Seoul on Monday, contrasting with a 5.2% rise in the broader Kospi index. Regulatory authorities continue to scrutinize the circumstances surrounding the handling of SpaceX share allocations by Korean brokers and asset managers.