"Retail Investors 'Furious' After Being Completely Wiped Out by YouTube Stock Experts"

FSS Detects 120 Illegal Cases in Stock Leading Rooms on YouTube and Others
'Pay After Profit' Turns into Unauthorized Charges

As the number of victims suffering from so-called stock leading rooms increases, investment damages through YouTube are also understood to be on the rise.

[Asia Economy Reporter Han Seung-gon] "Anyone could see they were experts... so I trusted and invested. But to find out it was a scam is truly absurd."

It has been revealed that complaints related to quasi-investment advisory businesses filed with the Financial Supervisory Service (FSS) have surged sharply. In particular, among broadcasting media operating YouTube stock channels, illegal activities were detected in 6 out of 10 cases.

Considering YouTube’s ecosystem, where anyone can easily access and share content, the number of investment victims is expected to be even higher. This is the first time financial authorities have inspected quasi-investment advisory operators using platforms like YouTube.

On the 10th, the FSS announced that after inspecting 660 quasi-investment advisory businesses, 120 violations were found in 108 companies. The detection rate was 16.4%, up 2.4 percentage points from the previous year. In the first-ever inspection of broadcasting media, violations were found in 12 out of 20 companies, resulting in a detection rate of 60%.

Individual investors who decided to invest after watching YouTube expressed their dismay. Mr. Kim, a man in his 40s working in an office, said, "I subscribe to channels that recommend (stock) picks on YouTube," adding, "Sometimes I saw stock introductions that I couldn’t understand." He emphasized, "It seems right that investors themselves carefully analyze stocks and invest."

Another office worker in his 30s, Mr. Park, said, "Sometimes acquaintances share YouTube links related to investments, so I think we need to be cautious." He added, "After all, it’s more comfortable to invest after long analysis on your own." He further noted, "(Investment content shown on YouTube) should be viewed only as a simple reference; if it leads to actual investment, there’s nowhere to complain."

There is also some consensus. Mr. Kim, a self-employed man in his mid-30s, said, "There are experts who disclose their accounts and provide company analysis or investment guidance rather than stock recommendations," adding, "Such YouTube channels have a lot of content that can be referenced regarding investments." He stressed, "However, if they blatantly recommend stocks, it’s right to be suspicious."

In the case of unregistered discretionary investment management businesses, 28 cases were detected, showing the highest increase with 24 more cases (600%) compared to the previous year.

◆ "Luring investors with refunds if returns are not met" Complaints on the rise

The number of complaints related to quasi-investment advisory businesses filed with the FSS reached 3,442, a 97.4% increase from the previous year (1,744). The FSS selected a total of 660 companies for inspection, including 20 broadcasting platform companies, considering quantitative and qualitative factors such as frequent complaint companies and top revenue earners.

The detection rates for undercover and simultaneous inspections were 57.5% and 12.2%, respectively, similar to the previous year. The inspection revealed that one company lured investors by offering postpaid payments after service use and refunds if certain returns were not met, and obtained credit card information to charge fees without consent.

The main violations were identified as failure to report (39.2%), unregistered investment advisory (31.7%), unregistered discretionary investment (23.5%), and unauthorized investment brokerage (3.3%), in that order.

A total of 47 cases of failure to report were detected, accounting for 39.2% of all violations. This represents an increase of 23 cases (95.8%) compared to the previous year. Unregistered investment advisory violations totaled 38 cases, making up 31.7% of all violations, up 20 cases (111%) from the previous year. Unregistered discretionary investment violations were detected in 28 cases, showing the highest increase of 24 cases (600%) compared to the previous year.

Experts emphasize that recommendations for stocks and other solicitations are essentially scams. They pointed out the importance of having one's own investment philosophy and the need to be skeptical unless the advice comes from well-known and verified institutions.
[Image source=Yonhap News]

◆ Experts: "A truly unfortunate fact... investors need their own investment philosophy"

Experts emphasized cautious investing by individual investors. They stressed that investors should have their own investment philosophy as a standard and be able to invest with a plan.

John Lee, CEO of Meritz Asset Management, appeared on YTN Radio and said, "It’s all lies to say you can make money from stocks through short-term information. That doesn’t happen. You have to invest long-term." He added, "I know many YouTubers tempt people by saying you can make money quickly, but you should never fall for that. You need your own investment philosophy and must invest for a long time. It’s truly unfortunate."

Regarding investment planning, CEO John Lee suggested, "In foreign countries, it’s very common to form investment clubs among friends where trustworthy people research stocks together and study. Researching with people you trust is much more effective."

Hwang Se-woon, a research fellow at the Korea Capital Market Institute, said, "If information is shared within the legal limits, there’s generally no big problem. But looking at so-called leading rooms, there are many concerning aspects. They provide one-on-one advisory services, which are actually prohibited. It’s illegal."

He continued, "Simply put, customized advisory services are all illegal activities, so investors should be suspicious if someone says, ‘I provide one-on-one services,’ but the institution or company is completely unknown to you."

The government announced plans to strengthen systems to prevent investor damage alongside inspections of investment violations. The FSS emphasized, "We will continue to operate a joint inspection system with the stock exchange, associations, and related agencies and seek cooperation measures," adding, "To prevent investor damage, we will improve supervisory systems by strengthening regulations on market entry and business conduct of quasi-investment advisory businesses."