Clever Stock Manipulation to Be Prevented... Financial Authorities' 'Policy Seminar' on the 8th

Korea Exchange and Capital Research Institute Jointly Host
Vice Chairman Kim Soyoung Scheduled to Deliver Congratulatory Speech

A policy seminar aimed at diversifying sanctions for unfair trading practices such as stock price manipulation will be held on the 8th under the leadership of the Financial Services Commission. The seminar is expected to revive the momentum of unfair trading sanctions bills that failed to pass the 21st National Assembly and discuss ways to enhance the effectiveness of administrative sanctions introduced this year.

Exploring Domestic System Improvement by Referencing Overseas Cases

According to the financial investment industry on the 1st, the Korea Exchange and the Korea Capital Market Institute will jointly host the 'Seminar on Strengthening Responses to Unfair Trading in the Capital Market' on the 8th.

The seminar will be held at 10 a.m. in the conference hall on the first floor of the Korea Exchange, sponsored by the Financial Services Commission. Kim So-young, Vice Chairman of the Financial Services Commission, will deliver the congratulatory address.

The seminar is organized to review the current regulations and improvement measures for unfair trading practices such as insider trading and market manipulation. In particular, it will examine overseas cases of sanctions against unfair trading actors to explore ways to improve the domestic system.

Professor Kim Yoo-sung of Yonsei University Law School will present on the topic of 'Current Status and Improvement Measures of Unfair Trading Regulations,' and Research Fellow Jung Soo-min of the Capital Market Institute will present on 'Overseas Cases Related to Disclosure of Information on Unfair Trading Actors.'

The panel discussion will include moderator Nam Gil-nam, Senior Research Fellow at the Capital Market Institute, along with Choi Chi-yeon, Head of the Fair Market Division at the Financial Services Commission, Park Jong-sik, Deputy Director of the Market Surveillance Committee at the Korea Exchange, Kang Hyun-jung, lawyer at Kim & Chang Law Firm, Professor Kim Jung-yeon of Ewha Womans University Law School, and Professor Lee Jung-soo of Seoul National University Law School.

Diversification and Complexity of Securities Crimes

The need to diversify sanctions for unfair trading has been raised for several years. This is because as market manipulation, fraudulent trading, and insider trading continue, the nature of related crimes is becoming more diverse and complex. In 2023, the Financial Services Commission, Financial Supervisory Service, Korea Exchange, and prosecution cooperated to uncover three major cases of stock price manipulation, including the 'Ra Deok-yeon incident' in April. The Securities and Futures Commission under the Financial Services Commission handled 104 unfair trading cases last year alone, a 28% increase from the previous year.

Authorities have also strengthened their sanctioning measures. Last year, the Financial Services Commission established measures for sanctioning unfair trading in the capital market. A representative example is the amendment to the Capital Markets Act, which took effect on January 19 this year. The amendment includes the introduction of a penalty surcharge system for unfair trading, legal codification of the method for calculating unjust profits, and the introduction of a leniency program for voluntary reporters.

In particular, the ability to impose penalty surcharges up to twice the amount of unjust profits enables swift and effective sanctions. Previously, only criminal penalties such as fines and imprisonment were possible, requiring court rulings. Also, the legal codification of unjust profits calculation clarified the method, partially resolving ambiguities in punishment.

In academia, attention is focused on the need to supplement the newly established penalty surcharge system for unfair trading this year, as well as practical difficulties in the sanctioning process when unfair trading acts are detected. There is a call for more advanced discussions from a practical perspective, such as cases where criminal penalties and penalty surcharges overlap during the sanctioning process.

The financial authorities are continuing legislative discussions on sanctions for unfair trading acts with the 22nd National Assembly. Related bills that failed to pass before the expiration of the 21st National Assembly include: restrictions on capital market transactions by unfair trading actors (proposed by Rep. Yoon Chang-hyun), imposition of fines ranging from four to six times the amount of profits gained or losses avoided due to violations (proposed by Rep. Kim Yong-min), and payment suspension measures on accounts of unfair trading actors (proposed by Rep. Park Jae-ho).

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