FSS "Focused Investigation on Unfair Practices in Stock Leading Rooms... Strict Measures Enforced"

[Asia Economy Reporter Lee Jung-yoon] The Financial Supervisory Service (FSS) announced on the 18th that it has formed a task force (TF) and is conducting intensive investigations to handle multiple cases where operators of stock leading chat rooms spread false information and engaged in front-running before recommending stocks.

According to the FSS, the number of individual stock investors reached 13.74 million at the end of last year, a 51% increase compared to the previous year. In this situation, stock leading chat rooms, where self-proclaimed stock experts encourage trading to an unspecified large number of people by promoting loss recovery, have recently become prevalent.

The FSS is currently investigating cases where leading chat room operators colluded with external forces to spread false information, offload stocks to chat room members, and illicitly gain unfair profits, as well as cases of front-running using KakaoTalk leading chat rooms, YouTube, and securities broadcasts.

Front-running occurs when leading chat room operators collude with external forces and sell large quantities of stocks while spreading false information to induce purchases by members. There have also been cases where specific stocks were recommended through YouTube channels, and the operators sold those stocks held in their own accounts, causing damage to investors.

Additionally, there have been cases where a pattern of pre-purchasing followed by purchase recommendations, pre-selling, and member sell recommendations was repeated through stock leading chat rooms opened in KakaoTalk open chats. There were also instances where operators appeared on securities broadcasts to recommend buying specific stocks and then sold those stocks held in their own accounts.

Using illegal leading chat rooms can easily expose individual investors to losses and unfair trading practices, so special caution is required. First, investors may suffer losses due to front-running by leading chat room operators. Also, if operators submit a large number of manipulative orders and others participate, they may face charges of stock price manipulation.

Furthermore, if leading chat room operators present undisclosed information to encourage buying or selling and investors use this information, they may be punished for insider trading or market disorder offenses. Investors should also be cautious of financial losses such as false or exaggerated advertisements promising loss compensation or guaranteed profits, and refusal of refunds after charging high usage fees.

An FSS official stated, "We plan to promptly conclude the ongoing investigations related to leading chat rooms and take strict measures such as referring cases to investigative agencies," adding, "We will continuously conduct intensive investigations into financial crimes that infringe on people's livelihoods by thoroughly analyzing reports and tips from individual investors."

He continued, "To fundamentally resolve unfair trading practices through leading chat rooms, it is necessary to improve individual investors' awareness and simultaneously promote self-regulatory efforts by platform operators," and added, "We have requested cooperation from major platform operators to strengthen their self-regulatory functions."

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