The Securities and Futures Commission Refers 64 Individuals and 25 Corporations for Unfair Trade Practices in Q2 to Prosecution

[Asia Economy Reporter Park Jihwan] The Securities and Futures Commission under the Financial Services Commission disclosed cases of unfair trading in the capital market for the second quarter of this year, including fraudulent trading, market manipulation, and insider information violations.

On the 1st, the Securities and Futures Commission announced that it took actions such as prosecution and notification to the prosecution against 72 individuals and 33 corporations as major sanctions for unfair trading in the capital market in the second quarter of this year. Specifically, prosecution and notification measures were taken against 64 individuals and 25 corporations. Additionally, fines were imposed on 5 individuals and 8 corporations.

Unfair trading cases detected included fraudulent trading, market manipulation, and insider information misuse.

Regarding fraudulent trading, unfair cases involved individuals artificially boosting the stock price of stocks they held by leveraging their reputation in stock investment to recommend specific stocks on stock investment-related internet cafes and other platforms. This method involved pre-purchasing specific stocks at a low price in advance, concealing this fact, and then recommending them through stock-related internet cafes and other stock investment content.

In terms of market manipulation, cases included individuals with substantial financial resources preemptively controlling the supply of stocks with low circulation and trading volume, then artificially raising stock prices through manipulative trading. This includes not only inducing others to trade stocks to raise prices and gain profits but also artificially defending the price decline of stocks they hold, which can be considered prohibited market manipulation under the Capital Markets Act. The Financial Services Commission advised, "Investors should be especially cautious of sudden price fluctuations when investing in stocks with low circulation or trading volume, such as preferred stocks."

Insider information was also frequently detected in unfair trading cases. The financial authorities believe that information on large acquisitions or disposals of stocks that could affect corporate control, if disclosed, can influence not only general investors' investment decisions but also stock prices. Those intending to acquire or dispose of large amounts of stocks or those who obtain such information may engage in prohibited insider trading by exploiting information asymmetry with general investors to gain profits through stock transactions under the Capital Markets Act.

A Financial Services Commission official emphasized, "Even general investors must be very careful, as trading stocks using insider information before the electronic disclosure and within three hours after the disclosure can be considered unfair trading."