The financial regulator will ensure that the probe into the debt-saddled Tong Yang Group is done by principle to bring those responsible to account and minimize investor losses, its chief said Thursday, amid growing criticism that the regulator failed to prevent the crisis from occurring.

"We won't allow any tolerance or hesitation whatsoever in executing the probe on Tong Yang Group. Everything will be done as a matter of principle," Shin Je-yoon, the chairman of the Financial Services Commission (FSC), said before lawmakers at a parliamentary audit.

His remarks came as South Korea's 38th-largest conglomerate has been put under a debt rescheduling process since late September after it failed to pay back maturing short-term debts worth some 110 billion won ($103.1 million) on time.

The liquidity shortage has so far placed five Tong Yang Group units under court receivership, leaving tens of thousands of individual investors who bought the firm's bonds on the verge of losing their money.

The FSC has launched an all-out investigation into the cash-strapped firm to see if there were any activities of unfair trading headed by the group's family members or executives to avert losses.

Retail investors, with the help of a local consumer advocate group, have staged rallies in protest, blaming the regulatory authorities for overlooking Tong Yang's financial flaws prior to the impending crisis.

In response to the growing criticism, Shin vowed to hold those in charge of the Tong Yang bond sales responsible with heavy punishment if any irregularities are discovered through the probe.

He stressed that the FSC will help small investors receive full support with any legal procedures they want to pursue against Tong Yang Group, as well as working to ameliorate rules so as to prevent a corporate default beforehand.

That aside, Shin reiterated his will to pursue the key tasks unrolled by the FSC as planned, including the sale of Woori Finance Holding Co.

"We're going to announce the shortlist for the regional bank group before the end of this month. It is our mission to take the privatization (process) swiftly."

In late June, the FSC rolled out the plan to sell the state-run banking giant and its 13 affiliates into three batches -- regional bank, brokerage and flagship Woori Bank -- in its fourth attempt to place the firm in private hands.

Woori Finance Holdings was created in 2001 with taxpayer money worth 13 trillion won by merging five troubled banks. The government tried to sell it three times in the past but failed due to a lack of buyers. (Yonhap News)