Financial Authorities "Regularly Announce Major Unfair Trading Cases"
[Asia Economy Reporter Minji Lee] The Securities and Futures Commission (SFC) under the Financial Services Commission announced major sanctions cases related to unfair capital market transactions in the first half of the year, including violations of insider trading prohibitions, market manipulation, and fraudulent trading.
According to the financial authorities on the 30th, the total number of cases reported or referred to the prosecution in the first half of this year reached 18. The SFC stated, "Despite the COVID-19 situation, 44 individuals and 9 corporations (subject to dual punishment regulations) were reported and referred to investigative agencies."
Among the major cases related to insider information use, there was an incident where a financial investor (FI) passed undisclosed information related to a large-scale fundraising by a listed company to family members or acquaintances of a former executive of the listed company, who then used it for stock trading. The SFC explained that obtaining insider information about changes in management rights or large-scale capital increases from insiders constitutes insider trading, and these individuals were reported and referred to the prosecution.
There was also a case where a full-time investor manipulated the market using multiple nominee accounts. The suspect used automated orders and remotely accessed several accounts with one computer to simultaneously submit large stock orders across multiple accounts. They repeatedly submitted orders one share at a time hundreds of times at a speed of 4 to 5 times per second, submitting manipulative orders to artificially raise the stock price.
Additionally, fraudulent trading occurred where a listed company was acquired without capital, and false or exaggerated disclosures were made to boost the stock price. After acquiring the listed company using private loan funds without capital, they continuously disseminated materials claiming product development through the acquisition of overseas technology companies despite low technical completeness and commercialization potential, and entry into new businesses linked to major domestic conglomerates. They also created a false appearance of maintaining investment funds from large institutional investors to lure general investors to buy and raise the stock price.
Over the past five years, the number of cases related to unfair trading reported or referred to the prosecution by the SFC were 79 in 2015, 81 in 2016, 76 in 2017, 75 in 2018, and 58 in 2019. The financial authorities stated, "In cooperation with the prosecution, we will focus on investigating new types of unfair trading based on information collection and detection of illegal activities," and added, "We will periodically provide key information on major cases that require public disclosure to prevent unfair trading or have significant social impact."
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