Financial Supervisory Service Forcibly Deregisters 105 Pseudo-Investment Advisory Firms

The Financial Supervisory Service has forcibly deregistered 105 pseudo-investment advisory firms, removing them from the market. This measure aims to prevent investor losses and eradicate unsound business practices.

On September 25, the Financial Supervisory Service announced that, after conducting fact-finding investigations in cooperation with the police, prosecutors, National Tax Service, and the Fair Trade Commission on 1,942 pseudo-investment advisory firms, 105 were forcibly deregistered. Of these, 102 firms had closed their businesses, while 3 were found to have violated financial regulations.

Firms that have been forcibly deregistered are barred from operating in the pseudo-investment advisory business for the next five years. If they continue to operate after deregistration, they may face criminal charges for unregistered business activities. The Financial Supervisory Service has made the list of these firms available through the financial consumer information portal 'FINE.'

Pseudo-investment advisory business refers to providing non-personalized investment advice on financial investment products such as stocks to an unspecified number of people for a fee. Unlike investment advisory firms, there are virtually no entry requirements, and individuals can operate such businesses simply by registering, leading to a continuous increase in their numbers.

However, with the strengthening of supervision over pseudo-investment advisory businesses in 2019, a validity period for registration was introduced. As a result, starting in 2024, some firms’ registration periods expired, leading to a downward trend in the number of registered operators. In fact, the number decreased steadily from 2,087 in 2022 to 1,861 as of June this year.

Additionally, a system of forced deregistration has been implemented to prevent investor losses caused by unsound business practices of unqualified operators. Since 2022, around 100 firms have been removed from the market each year.

The Financial Supervisory Service stated, "In August last year, regulations on the business activities of pseudo-investment advisory firms were strengthened," adding, "We will continue to provide guidance on relevant laws through education and will monitor for violations that could be grounds for forced deregistration."

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