The financial watchdog said Tuesday that it will tighten its monitoring of wrongdoings and illegal practices by local asset management firms to protect retail investors.

The Financial Supervisory Service said it has carried out in-depth on-site inspections of 86 asset management companies in June to check their compliance with regulations in selling funds and other financial instruments.

The inspection results showed that fund managers at most asset management companies engaged in illegal practices in which they reach agreement with brokers to share investment profits before they actually trade equities or debts on the market.

“This is a widespread practice among nearly all asset management companies and their employees,” said the FSS. “Fund managers and brokers made an agreement on profit allocation before they get into the market and make transactions as if they are legal.” (Yonhap)