Financial Supervisory Service Special Investigation Team Transfers Securities Firm Researcher on 'Fraudulent Trading Allegations'

The Financial Supervisory Service (FSS) announced on the 27th that it has referred a securities firm researcher suspected of fraudulent trading to the prosecution.

According to the FSS, the Capital Market Special Judicial Police under the FSS recently referred one securities firm researcher to the Seoul Southern District Prosecutors' Office with a recommendation for indictment. The FSS investigation department notified the Securities and Futures Commission under the Financial Services Commission via the fast track (emergency measure), and the special judicial police of the FSS conducted the investigation under the direction of the Southern District Prosecutors' Office.

The referred researcher is known to have worked at three securities firms over ten years and held significant influence in the industry, having been selected as a 'Best Analyst' in their field. It was confirmed that the researcher used nominee securities accounts to purchase stocks of 22 companies before publicly releasing their research analysis containing buy recommendations, and then sold the stocks after the publication, obtaining approximately 520 million KRW in illicit gains.

The FSS emphasized, "Researchers play a role in resolving information asymmetry among market participants by preparing and publishing research analysis based on information obtained through corporate visits and other means, thus requiring high trust and ethical standards. Using research analysis as a tool to obtain illicit gains is a serious criminal act that betrays the trust of the capital market."

It added, "Recently, similar unfair trading incidents involving researchers have repeatedly occurred, so securities firms must recognize the seriousness of the issue and strengthen internal controls, including improving the review and publication procedures of research analysis, to prevent unfair trading. We plan to respond strictly through thorough investigations against any acts that undermine the order of capital market transactions."

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