"AI Takes the Lead" Amid KOSPI 7,000 Surge... Authorities Crack Down on Illegal Finfluencers

Financial Services Commission Holds First Regulatory Reform Meeting
Financial Supervisory Service Launches AI Monitoring and Dedicated Task Force

The financial authorities, after setting up an AI-based real-time monitoring system to prevent illegal activities by so-called "finfluencers" (financial influencers), are now moving forward with the development of related regulations. This comes amid concerns that unfair practices by finfluencers could become more rampant, given the heated atmosphere in the stock market following the breakthrough of the KOSPI 7000 mark.

According to the Financial Services Commission and the Financial Supervisory Service on May 7, the Financial Services Commission held its first meeting on system improvements for regulating illegal activities by finfluencers the previous day, presided over by Byeon Jeho, Director General of the Capital Markets Bureau. The meeting reviewed the main types of illegal activities committed by finfluencers and examined whether these could be addressed under the current regulatory system.

This measure follows growing criticism from both inside and outside the market that the area where non-financial investment professionals, such as finfluencers, provide investment information in the form of content is a regulatory blind spot. Recommending specific stocks without registering as an investment advisory business may constitute a violation of Article 101 of the Capital Markets Act. However, under the current regulatory framework, it is not easy to crack down on finfluencers.

The financial authorities believe that, since finfluencers act as both information providers and market participants, conflicts of interest are inevitable, and are considering how to regulate this aspect. They are also reviewing foreign cases where finfluencers pre-set trading positions on certain stocks and then produced related content, which became a source of controversy.

The Financial Supervisory Service is also leveraging its recently introduced AI system to monitor new videos on finfluencer channels 24 hours a day in real time. The system automatically detects new videos on monitored channels, extracts the audio and subtitles from the collected videos, and classifies them in real time as "illegal," "suspicious," or "normal" based on the degree of violation. The AI analysis results are then cross-referenced with reports and market information, and if evidence of illegal activity is found, the case is referred to investigative agencies or administrative action is taken.

In particular, the Financial Supervisory Service is actively considering special judicial police investigations into practices such as front-running—where a finfluencer recommends a stock after purchasing it themselves and then sells at a profit as buying pressure increases—or the dissemination of false information. Last month, a dedicated monitoring team uncovered illegal finfluencers, such as YouTubers who induced financial investments from members while collecting up to 600,000 won per month without registering or reporting to the authorities.

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