"Eradicating Unfair Trading, Amending the Commercial Act" Lee Chanjin's FSS Faces Key Capital Market Issues

Lee Chanjin, who has taken office as the first chief of the Financial Supervisory Service (FSS) under the Lee Jaemyung administration, will play a key role in actively supporting capital market revitalization to achieve President Lee's pledge of "KOSPI 5000," while also taking on the crucial task of eradicating unfair trading practices such as stock price manipulation. As a close confidant and key figure who has maintained a long-standing relationship with President Lee, it is expected that he will closely support the administration's top policy priorities, including the immediate amendment of the Commercial Act.

Lee Chanjin, the new Financial Supervisory Service (FSS) Governor, is delivering his inaugural address at the inauguration ceremony held at the Financial Supervisory Service in Yeouido, Seoul on the 14th. Photo by Yonhap News

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At his inauguration ceremony held on the afternoon of August 14 at the FSS headquarters in Yeouido, Lee emphasized, "All economic players must be able to participate in innovation and value creation based on trust in the fair distribution of outcomes, and a foundation for innovation must be established so that fresh ideas in the market can be realized." This aligns with the broad framework of "fair economy" that President Lee has emphasized since his presidential campaign, and is consistent with the new government's policy agenda announced the previous day.

The five supervisory directions outlined in his inaugural address fully reflect these principles. In particular, the two key areas directly related to the capital market are: ▲ strengthening the capital supply function to support an innovation base, and ▲ establishing a fair market order. This demonstrates the intention to accelerate the achievement of KOSPI 5000 by both resolving the chronic "Korea Discount" in the domestic stock market and laying the foundation for innovative growth.

First, Lee stated, "We will establish a foundation for innovation to enable a leap forward," adding, "We will introduce venture capital supply funds and a co-prosperity index for small and medium-sized enterprises (SMEs) to expand the supply of venture capital from the financial sector to SMEs and startups. In addition, we will strengthen the capital supply function of the capital market to support companies in smoothly raising growth capital from the market."

Second, he expressed his commitment to "establishing a fair market order." Lee emphasized, "Companies must establish a fair governance structure centered on shareholder value, and we will support the successful implementation of the recently passed amendments to the Commercial Act in the National Assembly, thereby creating an order in which the rights and interests of both controlling and minority shareholders are equally respected." As corporate governance has long been cited as a major factor behind the Korea Discount, he highlighted the need to improve governance through the implementation of the revised Commercial Act. He also stated, "We will respond strictly, with zero tolerance, to acts that undermine market order and fairness, such as stock price manipulation or abuse of monopoly power," reaffirming the so-called "one-strike-out" policy.

Yonhap News

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Born in 1964, Lee is a graduate of Seoul National University's College of Law and was a classmate of President Lee at the Judicial Research and Training Institute. In particular, as a close confidant who served as President Lee's defense attorney in cases such as election law violations and the Ssangbangwool remittance to North Korea trial, it is expected that the FSS will be further empowered under his leadership. In this context, how the relationship between the FSS and the Financial Services Commission will be structured is also drawing attention. Under the previous Yoon Suk-yeol administration, former FSS chief Lee Bokhyun, who was considered a key figure, and the head of the Financial Services Commission were known to have publicly expressed differing opinions on major issues such as the Commercial Act amendment and short selling, revealing a subtle relationship.

Lee, who comes from a legal background, is seen as lacking a clear track record in the financial sector. However, in relation to the capital market, he has provided legal advice and handled litigation on capital market accounting for numerous companies, including venture startups and listed firms. He also emphasized the active exercise of voting rights by institutional investors as a member of the National Pension Fund Management Committee.

Accordingly, there are expectations that under Lee Chanjin's leadership, the FSS will actively voice its stance on protecting minority shareholders and financial consumers, as well as eradicating unfair practices in the capital market. At the end of last month, the financial authorities jointly launched a "Task Force for the Eradication of Stock Price Manipulation." The market expects that as early as next month, the first case of "total financial ruin upon detection of stock price manipulation" may emerge.

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