[Policy Pulse] The Politics of Language Connecting the Tariff War and the ELS Incident

Published 05 Mar.2026 10:07(KST)

US Supreme Court’s Interpretation of "Regulate"
How a Single Word Defines the Boundaries of Power
Korean Financial Authorities Also Need Greater Precision

Attorney Soo Man Park

The ruling on tariffs handed down by the US Supreme Court on February 20, 2026, reaffirmed the role of the judiciary. President Donald Trump declared the influx of illegal drugs and chronic trade deficits a national emergency, and imposed tariffs as a solution. The legal basis was the International Emergency Economic Powers Act (IEEPA). The core issue was the meaning of the word "regulate," as used in this provision.

The majority opinion held that the power to levy taxes is a fundamental authority of the legislature and that this authority cannot be delegated based solely on the interpretation of a single word without clear statutory language. In contrast, the dissenting opinion argued that imposing tariffs is a less severe form of regulation than an outright import ban and should therefore be considered as included within the meaning of "regulate." In this case, the definition of a single word determined the scope of governmental power.

Let us now turn our attention to the domestic financial market. Recently, in connection with the ELS (Equity-Linked Securities) incident, financial authorities have been discussing imposing substantial fines based on the term "revenue, etc." as stipulated in the Financial Consumer Protection Act. The Enforcement Decree defines this as "all forms of monetary gains, etc., obtained from financial consumers through the conclusion and execution of contracts." However, questions remain as to whether this definition adequately encompasses the diverse types of transactions in the financial industry.

An even more fundamental issue lies in the term "sale." Generally, "sale" refers to the act of providing goods or services in exchange for payment. However, in the financial sector, "sale" is used as a broad concept covering all activities of offering and brokering transactions to clients. This usage obscures the true nature of financial products.

For instance, in the case of ELS, investors formally purchase securities; in substance, however, they are entering into a structure in which they assume certain risks under specific conditions. Investors expect future returns, but they also guarantee the possibility of losses. If the risk structure were described more directly, it would be more accurate to view these as contracts for assuming certain risks, rather than as "investments." Nevertheless, the moment these are labeled as "sales," clients are perceived as acquiring rights, and the substance of the risk they bear becomes diluted.

The term "professional investor" presents a similar issue. The Capital Markets Act classifies professional investors based on criteria such as asset size, but this does not always correspond to financial product expertise. The recent ELS incident has reignited the question of whether it is appropriate to relax investor protection mechanisms solely on the basis of asset size. The US Supreme Court, in its 170-page decision, meticulously examined the limits of the delegation of authority with respect to the meaning of "regulate." After all, the interpretation of a single word can determine the boundary between legislative and executive power.

The same holds true in the domestic financial market. If terms such as "revenue," "sale," and "professional investor" do not accurately reflect their substantive meaning, their interpretation will ultimately decide the scope of responsibility and limits of authority. Words are not merely expressions—they are mechanisms that define the structure of institutional frameworks. The ELS incident underscores the need to review the meanings of key terms used in financial industry statutes and practices. Just as the judiciary rigorously examined the meaning of "regulate," we, too, must now scrutinize the accuracy of the language used in the financial market.