"100% Refund If No Profit": Improper Advertising Firms Fined 500 Million Won

Inspection and Review of Unregistered Investment Advisory Firms' Business Practices in 2025

"Expected monthly return: ○○%.", "100% refund guaranteed if no actual profit is earned." The financial authorities have uncovered unregistered investment advisory firms violating the Capital Markets Act by luring consumers with exaggerated returns or illegal advertisements such as profit guarantees, imposing fines totaling approximately 500 million won.

According to the Financial Services Commission and the Financial Supervisory Service on April 20, 2026, a regular inspection of the business practices of unregistered investment advisory firms in 2025 found 133 violations by 105 companies. Additionally, the FSS inspected 49 such firms with respect to new regulations on improper indications and advertisements, and found that 35 companies violated the Capital Markets Act.

Accordingly, the Financial Services Commission imposed a total of 470 million won in fines on the 35 unregistered investment advisory firms. In terms of the amount, this represents an approximately 3.3-fold increase from the previous year (22 companies, 140 million won).

An official from the Financial Services Commission stated, "Violations related to reporting obligations and unregistered advisory or discretionary services are on the decline, but compliance with rules regarding improper indications and advertisements is still insufficient." The new regulations on improper indications, advertisements, and omissions of required information came into effect in August 2024, and this was the first inspection conducted under these rules.

Major violations included: ▲ omission of essential disclosure items in advertisements and indications ▲ use of trade names that could mislead consumers into believing the firm is a licensed financial institution ▲ presenting profit rates that are false or unrealized ▲ posting advertisements suggesting profit guarantees or loss compensation.

Firstly, when unregistered investment advisory firms publish indications or advertisements about their work or financial investment products, they must include statements specifying that individual investment consultations and fund management are not available, that principal loss is possible, and that they are not licensed financial investment firms. However, there were cases where these requirements were omitted.

In addition, unregistered investment advisory firms are prohibited from using names such as "○○ Financial Investment," "○○ Securities," "○○ Asset Management," or "a company under the FSS," which could mislead consumers into thinking they are regulated financial institutions under the supervision of the FSS. It is also forbidden to use trade names similar to large corporations or major financial companies, or to advertise in a way that may cause consumers to mistake them for affiliates of such companies, but violations of these rules were found.

Furthermore, it was confirmed that some firms misrepresented cumulative returns by simply adding up returns by item and presenting them as a single rate of return, or by advertising unrealized returns such as "Target return ○○%" or "Expected monthly return ○○%," both of which are prohibited practices that were not followed.

Advertisements suggesting that loss compensation or profit guarantees are offered, such as "100% refund if no actual profit is earned" or "full refund of membership fees in case of loss," are also strictly forbidden.

Based on the results of this inspection, the financial authorities plan to eradicate illegal activities among unregistered investment advisory firms and establish a sound capital market order by building a "monitoring and selective response system for illegal activities" targeting these firms.

Specifically, starting this year, the monitoring system for illegal activities will be reinforced. Firms caught engaging in illegal activities will be classified as high-risk or low-risk, and a selective inspection system focused on preventing consumer harm will be operated, with intensive inspections for high-risk firms.

As the illicit business activities of these firms become more sophisticated, inspection and audit capabilities will be strengthened, and strong enforcement will be maintained by increasing the rate of detection through close cooperation with related agencies. In cases of repeated violations, firms may also be expelled through administrative cancellation of their registration.

An FSC official emphasized, "We will provide detailed guidance on the main types of illegal activities and enforcement cases to these firms to encourage self-regulation, urge compliance with relevant laws, and focus on preventing investor harm by blocking the potential for illegal activities in advance."

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