Insider Trading Using Non-Public Information Punished by '3-5 Times Profit Fine + Up to Life Imprisonment'

[Sejong=Asia Economy Reporter Son Seon-hee] The government plans to significantly strengthen penalties for real estate speculation using undisclosed information in the wake of the Korean Land and Housing Corporation (LH) employee land speculation scandal. Profits gained from illegal acts related to public housing projects will be confiscated, and fines amounting to 3 to 5 times the profits will be imposed. Those who gain profits exceeding 5 billion won will face a maximum life sentence, and those who gain profits between 500 million and 5 billion won will be sentenced to at least 3 years in prison.

On the 28th, the Democratic Party, Ministry of Strategy and Finance, and Ministry of Land, Infrastructure and Transport held a party-government meeting to discuss these anti-speculation measures. The measures discussed will be announced at an emergency anti-corruption policy meeting chaired by President Moon Jae-in on the 29th. It is known that strong punishment measures for illegal real estate activities by public officials will be prepared.

Employees of ministries related to real estate policy or public institutions will be required to register their assets like high-ranking officials, and must report the circumstances and sources of funds when acquiring real estate. In particular, acquiring real estate related to their work field will be completely prohibited. Nevertheless, if illegal real estate activities are committed using undisclosed information, penalties will be significantly strengthened.

In the case of LH, the same penalty regulations will apply not only to current executives and employees but also to retirees within 10 years who use undisclosed work-related information in real estate transactions.

Relatedly, on the 24th, the three laws to eradicate real estate speculation (Public Officials Ethics Act, Special Act on Public Housing, and LH Act) were passed in the National Assembly. Asset registration regulations will apply six months after the law is promulgated, and penalty regulations will apply from the date of promulgation.

The government is also considering improving the management evaluation system to prevent moral hazard among public institution executives and employees. This includes increasing the scoring for ethical management and public interest, and deducting management evaluation scores when a 'major accident' like the LH scandal occurs. If an institution fails the management evaluation, the head of the institution may be dismissed, and executives and employees may have their performance bonuses reduced or forfeited.

In the case of LH, if the ongoing investigation confirms employees' speculation suspicions, the management evaluation scores already received may be lowered, and previously awarded performance bonuses may be reclaimed.

The party and government also plan to apply strict punishment not only to public officials involved in real estate speculation but also to third-party private traders who received information and committed related illegal acts. Those who commit illegal real estate acts such as speculation using undisclosed information will be barred from employment at land and housing-related institutions and restricted from obtaining related licenses such as real estate agent and appraiser certifications.

Additionally, to prevent speculation by purchasing land just before development, compensation will be differentiated according to the land holding period. For land in the metropolitan area and elsewhere, submitting a funding plan at the time of transaction will be mandated, similar to housing in speculative overheated districts.

This content was produced with the assistance of AI translation services.