[2020 National Audit] Kim Byung-wook "YouTube Stock Recommendations Cause Major Harm... Strict Standards Needed"

[Asia Economy Reporter Minji Lee] As cases of consumer harm caused by recommending specific stocks on YouTube are increasing, there is an opinion that strict standards should be applied for supervision. It is pointed out that YouTube is in a blind spot of supervision despite acting like a quasi-investment advisory firm.

Yoon Seok-heon, Governor of the Financial Supervisory Service, is attending the comprehensive audit of the Financial Services Commission and the Financial Supervisory Service at the Political Affairs Committee meeting held at the National Assembly on the 23rd, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

At the National Assembly's Political Affairs Committee and the Financial Services Commission and Financial Supervisory Service (FSS) audit on the 23rd, Kim Byung-wook, a member of the Democratic Party of Korea, said, “Recommendations for specific stocks are being made on YouTube, but the FSS says it is not subject to regulation,” adding, “Strict standards should be applied to supervise (YouTubers).”

According to data presented by Representative Kim Byung-wook, cases of damage caused by YouTubers recommending specific stocks have been increasing every year. Consumer consultation cases were 686 in 2015, 13,181 in 2019, and 7,956 up to July this year.

Regarding this, Representative Kim said, “The FSS interprets that YouTube channels cannot be considered quasi-investment advisory businesses under the Capital Markets Act, but this is incorrect,” and pointed out, “They made a narrow interpretation of the law.” Under the Capital Markets Act, quasi-investment advisory business refers to providing investment judgments and advice on financial investment products for a certain fee. YouTubers recommending stocks are not classified as quasi-investment advisory businesses because they do not directly receive a certain fee.

Representative Kim emphasized, “Although they do not receive fees from contractees, they receive fees from front advertising, covert advertising, and commissions from YouTube,” and said, “It is not appropriate to interpret physically and say they are not subject to supervision.”

In response, Yoon Seok-heon, Governor of the Financial Supervisory Service, explained, “The market is moving connected to various media,” and said, “We will handle this in consultation with the Financial Services Commission.”