[Reporter’s Notebook] Severe Manpower Shortage to Combat Securities Crimes

Son Byung-du, Chairman of the Korea Exchange, is speaking at the joint discussion forum of related organizations to eradicate unfair trading held at the Korea Exchange in Yeouido, Seoul on May 23. Photo by Hyunmin Kim kimhyun81@

"We deployed 20 employees from the Market Surveillance Headquarters to conduct a full investigation of 4,500 Contract for Difference (CFD) accounts, and sent 5 more to the joint investigation team, which has delayed the unfair trade hearings."

This is the rebuttal from the Korea Exchange Market Surveillance Committee (MSC) regarding a recent feature article pointing out a significant decrease in the number of detected unfair trade cases. The MSC explains that because 25 of its employees were seconded to the so-called 'Ra Deok-yeon Gate' investigation for over two months, there is a shortage of personnel, and thus the absolute number of detected cases has decreased so far. However, since the suspicious price manipulation trades occurred before the task force (TF) was formed, the MSC official’s explanation in response to our article criticizing the market surveillance system’s operation lacks persuasiveness.

Nonetheless, there is a point worth listening to in his remarks: the 'lack of manpower.' This could be a major reason why the MSC’s core duties of monitoring and hearings are not functioning properly. With fewer personnel than usual handling monitoring and hearing tasks, it is reasonable to say that since the TF was formed at the end of May, the unfair trade hearing work has been difficult.

The MSC also acknowledged that "hearings are being delayed." This is understandable. The remaining staff are taking on the workload of those seconded, increasing work fatigue. However, the MSC explains that once the seconded employees return to their normal duties, the number of detected cases could increase within this year. But it is obvious that if suspicious trades are reviewed late, investigations will inevitably take a long time.

When choosing between urgent and important tasks, important tasks must come first. While the Ra Deok-yeon Gate investigation is urgent, neglecting monitoring and hearings, which could be even more important, is problematic. However, the MSC requested additional personnel from the Management Support Headquarters, but the situation remains at a standstill. According to a senior official at the Exchange, it is not easy at the moment to increase suitable personnel who can analyze trading.

The Exchange is the frontline sentinel against unfair trading activities. The unfair trade surveillance system consists of the stages: 'hearing → investigation → prosecution.' The first stage, hearing, is the Exchange’s responsibility. This is why the MSC needs absolute manpower. Nevertheless, the number of personnel in the Market Surveillance Department responsible for real-time monitoring has decreased from 26 to 23 over the past five years, and the number in the Hearing Department responsible for detailed analysis has dropped from 41 to 36. If increasingly sophisticated securities crimes are not detected in time, investors will inevitably suffer losses. The MSC’s complaint about the lack of absolute manpower is not mere exaggeration.

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