[Exclusive] Lee Yong-woo Proposes Strengthening Criminal Punishment Law, Using Mobilized Funds as Basis Instead of Unjust Gains for Stock Manipulation Penalties

Possibility of Unconstitutionality in the Revised Bill Changing the Method of Calculating Unfair Gains from Stock Price Manipulation
Strengthening Criminal Punishment Difficult, Leading to Lenient Penalties
Criminal Punishment Based on Amount Used in Unfair Trading

Lee Yong-woo, a member of the Democratic Party of Korea, is pushing for a bill that strengthens criminal penalties based on the amount used for stock price manipulation rather than unjust gains. This is due to the judgment that under current law, criminal penalties for stock price manipulation offenders are unlikely to go beyond a 'light slap on the wrist' level.

According to the National Assembly's Political Affairs Committee, Lee Yong-woo's office is reviewing a bill to strengthen criminal penalties based on the amount involved in unfair trading activities such as stock price manipulation. This is because it is considered difficult for the Capital Market Act amendment (including the method of calculating unjust gains, doubling fines, and leniency) to pass at the National Assembly Judiciary Committee on the 29th.

Previously, the Court Administration Office expressed concerns about the unconstitutionality of the Capital Market Act amendment. The report stated, "There is a possibility that the burden of proof could be shifted to the defendant, which may violate the fundamental principle of criminal trials, the presumption of innocence," and added, "Careful review is necessary."

The three major unfair trading acts are subject to criminal penalties. The problem lies in the basis for criminal punishment, which is the 'calculation of unjust gains.' Unjust gains are strictly limited to the increase in stock price resulting from stock price manipulation. This means that if the prosecution cannot prove the causal relationship between the stock price increase and the manipulation, punishment cannot be imposed.

The issue is that in reality, during stock price manipulation, external factors such as performance improvement and favorable market conditions occur simultaneously and affect the stock price. It is difficult to strictly separate and calculate only the stock price increase due to manipulation, so many cases have judged the amount of unjust gains as 'unknown.' This is why sentences for stock price manipulation offenders have been low or why many have received deferred prosecution.

[Image source=Yonhap News]

Lee Yong-woo's office is preparing a new bill to strengthen criminal penalties without shaking the basic principles of the Constitution and Criminal Law. The main point of the bill is to specify the basis for criminal punishment as the 'amount used for stock price manipulation' rather than the amount of unjust gains.

If the amount used for stock price manipulation is used as the basis, the prosecution only needs to prove the criminal act. When based on unjust gains, there are limits to the prosecution's burden of proof, but applying the standard based on the amount involved in the crime makes proving the crime easier.

Meanwhile, the National Assembly Judiciary Committee will hold a plenary session on the 29th to discuss the Capital Market Act amendment again. The Political Affairs Committee internally believes that passing the amendment will not be easy.

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