Financial Supervisory Service Secures Investigative Authority... Enhanced Agility in Responding to Financial Crimes

Published 26 Mar.2026 07:04(KST)

The financial crime investigation system is being reorganized from a prosecution-centered approach to one led by the Financial Supervisory Service. With the Financial Supervisory Service’s special judicial police acquiring the authority to initiate investigations, the agility of capital market crime investigations is expected to significantly improve. However, given the need for expertise and legal review capabilities in financial crime investigations, it is likely that the prosecution will continue to play a certain role until its formal abolition.

Financial Supervisory Service. The Asia Business Daily DB

Starting next month, with the implementation of the amended "Capital Market Special Judicial Police Work Rules," the special judicial police of the Financial Supervisory Service will be able to commence investigations directly, without the need for a complaint or notification from the Securities and Futures Commission under the Financial Services Commission. Previously, a cumbersome process was required: "Financial Supervisory Service investigation → deliberation and resolution by the Securities and Futures Commission → notification to the prosecution → case assignment." Going forward, this process will be streamlined to "Financial Supervisory Service investigation → decision by the Financial Services Commission’s Investigation Review Committee → initiation of investigation." For compulsory investigations such as search and seizure, the process will remain the same, requiring the prosecution to request a warrant and the court to issue it.

Even with the expanded investigative authority of the Financial Supervisory Service, some believe that the prosecution's role will be maintained for the time being. An attorney at a major law firm stated, "While the Financial Supervisory Service has been empowered by acquiring investigative authority and the planned abolition of the prosecution, investigations are a separate matter. As capital market crimes become more sophisticated, meticulous legal structuring is as essential as speed. The Financial Supervisory Service will inevitably have to rely on the prosecution’s investigative know-how and expertise."

The Seoul Southern District Prosecutors’ Office is currently continuing to handle major financial crime cases. The Joint Investigation Division for Financial and Securities Crimes (headed by Chief Prosecutor Shin Donghwan) is investigating cases such as stock price manipulation by a former Daishin Securities employee and an entrepreneur involving a listed company, as well as allegations of insider trading by Rainbow Robotics executives and employees.

In the stock price manipulation case involving the former Daishin Securities employee, the Financial Supervisory Service conducted an investigation, but it did not lead to a formal complaint to the prosecution. Subsequently, the prosecution launched its own investigation and executed search and seizure operations at the Daishin Securities headquarters, the residence of the former Daishin Securities employee, identified as Mr. A, and the residence of the entrepreneur, identified as Mr. B. They were found to have engaged in prearranged trading by setting the buying and selling prices in advance and trading shares at agreed-upon times, using client accounts and borrowed-name accounts from the securities company. The prosecution indicted them on charges of violating the Capital Markets Act.

The prosecution is also investigating allegations of insider trading by 16 executives and employees of Rainbow Robotics, including its CEO, in a case referred by the Securities and Futures Commission under the Financial Services Commission. They are suspected of making unfair profits amounting to between 3 billion and 4 billion won by using undisclosed internal information during Samsung Electronics' acquisition of shares in Rainbow Robotics from 2022 to 2024.