FSS to Launch Crackdown on Unfair Trading by Finfluencers

Front-Running, Dissemination of False Information, and More
Focused Whistleblowing Period Begins March 23

Financial authorities are launching a rigorous investigation into unfair trading practices by so-called “finfluencers” (financial influencers) who are active on social networking services (SNS) and similar platforms.

The Financial Services Commission and the Financial Supervisory Service announced on March 22 that they will operate a focused whistleblowing period starting from March 23 to monitor acts such as front-running and spreading false information via finfluencers’ SNS accounts and securities broadcasts. The authorities plan to thoroughly analyze reported cases and immediately commence investigations upon detecting any suspicious activities. Whistleblowers who provide evidence helpful to substantiating charges may receive a reward of up to 30% of the illicit gains uncovered.

So far, the financial authorities have continuously strengthened market surveillance and investigations targeting unfair trading practices by finfluencers. Specifically, they are closely examining: ▲ front-running, where a finfluencer recommends a stock and then sells at a profit after a buying rush is triggered; ▲ the dissemination of false information or rumors exploiting anxiety about issues such as Middle East tensions; ▲ the spread of fake new business information in collusion with companies.

Currently, investigations are underway against multiple suspects. For example, suspect A, who operated a stock recommendation group on Telegram, was found to have purchased stocks before making recommendations and then sold them for a profit after the price rose following the recommendation. Additionally, expert B, who appeared on securities broadcasts, repeatedly obtained information about recommended stocks in advance, made preemptive trades, and then sold after the recommendations became public to ordinary investors.

The financial authorities stated, “Since finfluencers are delivering information simultaneously and through multiple channels, such as YouTube, Telegram, and paid information content, we plan to intensively monitor major information delivery platforms and take strict action upon detecting any violations.”

Alongside these measures, the authorities also issued guidelines for investors. They warned that recommending investments or spreading false information without disclosing conflicts of interest may constitute unfair trading. In such cases, it falls under fraudulent trading under the Capital Markets Act and can result in criminal penalties, including imprisonment for one year or more, or fines ranging from four to six times the amount of illicit gains.

They also cautioned investors against being swayed by baseless information or rumors, as this could lead to losses from sharp stock price declines. Participating in purchases with knowledge that a finfluencer is intentionally inflating prices could be considered price manipulation, and redistributing unfounded information may also be deemed fraudulent trading.

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