Prosecutor General Lee Won-seok Visits Korea Exchange... Expected to Express Determination to Eradicate Stock Price Manipulation

Prosecutor General Visits Exchange for the First Time
Expresses Commitment to Eradicate Unfair Trading Practices
Requests Strengthened Cooperation Between Exchange and Nambu District Prosecutors' Office

Amid a series of recent suspected stock price manipulation incidents, Prosecutor General Lee Won-seok will visit the Korea Exchange (KRX). This marks the first time the head of the prosecution has directly visited the Korea Exchange. It is expected that the prosecution and the Korea Exchange will demonstrate their commitment to strengthening cooperation in investigating unfair trading practices and strictly punishing offenders.

According to the Korea Exchange on the 21st, Prosecutor General Lee will visit the Korea Exchange in Yeouido, Seoul, on the afternoon of the 22nd to meet with Chairman Sohn Byung-doo. The two will hold discussions for about an hour regarding investigations and probes into unfair trading activities such as recent stock price manipulation.

From the prosecution side, Shin Bong-soo, head of the Anti-Corruption Department, and spokesperson Park Hyun-chul will attend. The Korea Exchange will be represented by Kim Geun-ik, chairman of the Market Surveillance Committee, among others. It is reported that the prosecution will request cooperation from the Korea Exchange concerning investigations into unfair trading practices during this meeting.

The reason for Prosecutor General Lee’s visit to the Korea Exchange is interpreted as a decision to send a message to the market regarding the recent consecutive stock price manipulation cases. About two months after the stock price crash incident triggered by Soci?t? G?n?rale (SG) on April 24, five stocks hit their lower price limits en masse on the 14th. Both incidents are suspected of stock price manipulation. They are considered new types of unfair trading practices as the stock prices were gradually raised over a long period without any positive news.

The Korea Exchange Market Surveillance Committee is the first institution to detect unfair trading activities. When the Market Surveillance Committee identifies abnormal data, it is passed through the Financial Services Commission to the Financial Supervisory Service. Depending on the case, the information is then forwarded to the Securities Crime Joint Investigation Team of the Seoul Southern District Prosecutors’ Office. Generally, the Market Surveillance Committee is said to detect 7 out of 10 cases of stock price manipulation. Thus, it is an important investigative partner for the prosecution.

Financial Supervisory Service Governor Lee Bok-hyun will not attend this meeting. This is interpreted as considering that Governor Lee, a former prosecutor, is well aware of the role of the Southern District Prosecutors’ Office and has already strengthened cooperation with the prosecution. At the National Assembly’s Standing Committee on Finance and Economy meeting on the 15th, Governor Lee stated, "Around 2020, not only the prosecution but also related institutions’ systems did not operate smoothly, and the abolition of the joint investigation team weakened response capabilities."

The Joint Investigation Team (Financial Securities Crime Joint Investigation Team) is an organization within the Southern District Prosecutors’ Office dedicated to investigating financial crimes. It was abolished in January 2020 by then-Minister of Justice Choo Mi-ae but was reestablished in September 2021 as the Financial Securities Crime Investigation Cooperation Group following successive incidents such as the Lime Fund and Optimus Fund scandals. With the inauguration of the Yoon Seok-yeol administration and the revival of the organization by Minister of Justice Han Dong-hoon, its activities have recently expanded.

A Korea Exchange official stated, "We will strengthen cooperation with the prosecution regarding investigations into unfair trading practices and improve the detection system for unfair trading to fully restore investor confidence."

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