Financial Authorities Warn to Be Cautious of Multi-Level Investment Solicitation and Stock Trading Induced Through Investment Briefings

[Asia Economy Reporter Koo Eun-mo] Cases of inducing stock trading through investment briefings or attracting investments in a multi-level marketing manner, causing investor damage, have been increasing.

On the 22nd, the Financial Services Commission and the Financial Supervisory Service stated, "Recently, unfair trading practices involving similar investment advisory firms, multi-level sales of unlisted stocks, and other unfair trading acts causing damage to general investors have been discovered, so special caution is required."

They found that these firms mainly raised funds from investors through multi-level pyramid-like schemes, recruited members through regional headquarters' investment briefings, used the raised funds to purchase stocks to boost stock prices, and then paid the purchased stocks as interest to further induce members to trade.

Additionally, it was found that they attracted investors by holding regular investment briefings for unlisted companies, selling stocks through nationwide regional sales organizations in a multi-level manner, and promoting unverified business contents of unlisted companies.

The financial authorities advised, "Investing based solely on recommendations at investment briefings or companies that attract funds by guaranteeing principal and high returns without verifying specific facts, or claiming the possibility of tens of times price surges, can cause significant losses," and recommended refraining from 'blind investments.'

Furthermore, they advised, "Since it is relatively difficult to verify the truthfulness of information related to the business performance and technology of unlisted corporations, investors should be cautious," and warned, "Disseminating false information or rumors related to stock trading may be considered unfair trading practices and subject to criminal penalties or fines."