Financial Services Commission Establishes Guidelines for Proprietary Trading Violations by Financial Investment Firms

[Asia Economy Reporter Minji Lee] The Financial Services Commission announced on the 18th that it has decided to impose severe disciplinary actions and fines for violations of the Capital Markets Act, such as nominee investments by executives and employees of financial investment firms discovered during inspections by the Financial Supervisory Service at the 1st regular meeting.

Additionally, the FSC plans to establish guidelines for determining proprietary trading by executives and employees, including nominee investments, and disseminate them to compliance monitoring departments of financial investment firms to prevent violations.

Executives and employees of financial investment firms must use accounts in their own names when trading financial investment products. Trading details must be reported to the company quarterly or monthly. Even if the account is under a corporation or another person's name, it may be considered nominee trading by the executive or employee depending on factors such as whether trading funds were provided, the level of involvement in trading activities, and the attribution of trading profits and losses.

The FSC stated, "It is crucial for financial investment firms and their executives and employees to pre-check whether trades constitute proprietary trading through the guidelines to prevent legal violations in advance," adding, "If proprietary trading by executives or employees is detected through internal audits, fines will be reduced."

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