98 Suspected Unfair Trading Cases Last Year... Use of Undisclosed Information Most Common

The Market Surveillance Committee of the Korea Exchange announced on March 11 that, as a result of its review of abnormal transactions last year, it reported a total of 98 cases of suspected unfair trading to the Financial Services Commission.

On the 10th, dealers are working in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. Photo by Jinhyung Kang

By type of suspected violation, the most common was the use of undisclosed information, accounting for 58 cases (59.2%). This was followed by unfair trading with 18 cases (18.4%) and market manipulation with 16 cases (16.3%).

By market, there were 66 cases (67.3%) in the KOSDAQ market, 28 cases (28.6%) in the KOSPI market, 2 cases (2.0%) in the KONEX market, and 2 cases (2.0%) in derivatives. The ratio of reported cases to the number of listed issues was also higher in the KOSDAQ market (3.6%) than in the KOSPI market (3.3%). In particular, the number of unfair trading cases reported among KOSDAQ stocks with weak governance structures was eight times higher than that of KOSPI stocks.

The average number of suspects reported per case for the main types of violations (unfair trading, market manipulation, and use of undisclosed information) was 16, an increase of one compared to the previous year. The proportion of insiders involved in unfair trading cases was 77.8%, which was significantly higher than in market manipulation (25.0%) and use of undisclosed information (50.0%).

The average amount of unjust enrichment per case was 2.4 billion won, up 33.3% from 1.8 billion won in the previous year. This increase is attributed to the growing sophistication and intelligence of unfair trading schemes, which has led to a larger scale of unjust enrichment.

In July last year, the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange jointly established the Stock Price Manipulation Eradication Response Team to expedite the handling of unfair trading cases and enhance work efficiency.

The Response Team has uncovered large-scale stock price manipulation by high-net-worth individuals, use of undisclosed information by securities firm executives, and front-running by journalists, and is currently reviewing and investigating multiple suspected unfair trading cases.

The Korea Exchange plans to carry out intensive reviews of major unfair trading cases, strengthen cooperation with regulatory authorities, and enhance analysis of new types of unfair trading under a close collaborative system with financial authorities.

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