Lee Bok-hyun, Financial Supervisory Service Chief, "Focused Inspection and Crackdown on Leading Chat Rooms and Themed Stocks... Eradicating Capital Market Crimes"

FSS-Kooksoo Headquarters, 'MOU to Strengthen Cooperation and Response to Capital Market Illegal Activities
Joint Task Force to Operate for 4 Months Until Year-End "Special Intensive Crackdown Planned"

On the 16th, at the Financial Supervisory Service in Yeouido, Lee Bok-hyun, Governor of the Financial Supervisory Service, is speaking at the "Financial Supervisory Service-National Investigation Headquarters Business Agreement Ceremony for Strengthening Cooperation in Responding to Illegal Activities in the Capital Market." [Photo by Yonhap News]

"We will take strong and strict measures to eradicate illegal activities that disrupt the order of the capital market and cause harm to the public."

On the 16th at 2 p.m., Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), signed a Memorandum of Understanding (MOU) with the National Investigation Headquarters at the FSS office in Yeouido, Seoul, to strengthen cooperation and response to illegal activities in the capital market, expressing a strong commitment to eradicating capital market crimes.

Through this MOU, the FSS and the National Investigation Headquarters agreed to cooperate and coordinate on △damage prevention publicity △information sharing △joint crackdowns △support for enhancing investigation and inquiry capabilities △faithful implementation of existing MOUs related to livelihood financial crimes such as voice phishing and illegal private financing.

Governor Lee stated, "Amid the COVID-19 situation, individual participation in the stock market has been activated, and the domestic capital market has also grown significantly in quantity (the number of shareholders of listed companies increased by 132.3%, from 6.2 million at the end of 2019 to 14.4 million at the end of 2022; individual stock market trading volume increased from 2,964 trillion KRW in 2019 to 5,153 trillion KRW in 2022; during the same period, the share of individual stock market trading volume rose from 64.8% to 65.8%)," but he pointed out, "However, qualitatively, such as investor protection, there are still shortcomings."

For example, recently, illegal leading chat rooms have been deceiving and misleading individual investors to engage in unfair trading or front-running, and cases causing financial damage through investment fraud have significantly increased. In addition, illegal and unfair acts that undermine the order of the capital market continue to occur, such as embezzlement and self-interest-seeking acts by financial company executives and employees, and unfair stock trading using rights offerings and convertible bonds (CB) by some listed companies.

Governor Lee emphasized, "The FSS established a crackdown team on leading chat rooms in June and has been expanding undercover inspections. It is conducting on-site inspections of financial companies involved in investment fraud and focusing on false rumor dissemination related to theme stocks. Furthermore, special investigation teams and information collection units have been set up to thoroughly eradicate unfair trading, and the FSS has selected self-interest-seeking acts by financial companies and accounting fraud by listed companies as key inspection and investigation targets, concentrating its capabilities accordingly." He added, "I understand that the National Investigation Headquarters is also actively responding to illegal activities in the capital market through focused crackdowns on leading chat rooms and investment fraud, but it is also true that there are limitations when each agency responds individually and independently. The significance of this MOU lies in integrating the expertise and infrastructure of the two agencies, and from September through the end of the year, a joint crackdown team will operate for four months to specially and intensively crack down on illegal investment briefings."

Governor Lee said, "The FSS and the National Police Agency have built a cooperative relationship regarding livelihood crimes such as voice phishing and illegal private financing, achieving certain results. I hope this MOU will further solidify the cooperation system between the two agencies and serve as an opportunity to restore order and trust in the capital market. I am confident that linking the capabilities and strengths of each agency will create synergy toward the common goal of eradicating capital market crimes."

On the same day, Woo Jong-su, Head of the National Investigation Headquarters, diagnosed, "As investment overheats, investment leading chat room frauds baiting high returns, as well as pyramid and multi-level investment frauds, have become frequent. Large-scale cases involving market manipulation and the use of undisclosed important information have followed, damaging the order of the capital market." He added, "The police are trying to identify clues as much as possible, consolidate cases presumed to be the same, and designate focused investigation stations to conduct comprehensive investigations. However, it is true that traditional capital market law violation cases such as market manipulation and use of undisclosed important information have rarely been handled so far." Head Woo emphasized, "We plan to promptly implement follow-up measures so that the agreement leads to tangible results that the public can feel. We promise to solidify the cooperation that the two agencies have maintained and to serve as a catalyst for eradicating evolving capital market crimes."

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