Financial Supervisory Service Establishes Investigation Team for No-Capital M&A

[Asia Economy Reporter Eunmo Koo] The Financial Supervisory Service (FSS) will establish a regular investigation team to monitor illegal activities through no-capital mergers and acquisitions (M&A). The Financial Services Commission, the prosecution, and the Korea Exchange also plan to discuss support measures.

According to financial authorities on the 15th, the FSS plans to create and operate a dedicated no-capital M&A team within the disclosure and investigation division following the upcoming department head personnel reshuffle. Along with the establishment of the regular team at the FSS, the Financial Services Commission, prosecution, and the Korea Exchange will discuss support measures through an investigation review council.

No-capital M&A refers to so-called "corporate raiders" acquiring companies using borrowed funds rather than their own capital. While this is not illegal in itself, it often leads to unfair trading practices such as spreading false information for short-term speculative gains. In this process, the acquired companies' performance significantly deteriorates, and general investors suffer losses due to sharp stock price fluctuations. On the 18th of last month, the FSS uncovered illegal activities in a total of 24 companies through a joint inspection of no-capital M&A.

Earlier, FSS Governor Yoon Seok-heon also stated in his New Year's address this year, "We will focus investigative capabilities on unfair trading that abuses no-capital corporate M&A or anonymity in the investment process."

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