Even Impersonating Korea Exchange... Why Financial Authorities Just Watch

Impersonation of Investment Experts, Celebrities, and Specific Institutions Online
Criminal Punishment Not Possible for Impersonation Alone... Civil Liability Recognized
Financial Authorities Can Act Only if Capital Markets Act Is Violated

"Every day before 8 AM, we recommend blue-chip stocks from the previous day. This event is conducted in collaboration with investors and is free of charge. It is limited to domestic professional investors or beginners who are only learning about stocks."

According to Meta (Facebook), on the 8th, an advertising page named "Korea Exchange" promoted an online stock lecture. The page used a photo of the Korea Exchange building as its profile picture and stole official promotional images to make it look like the official Korea Exchange page.

The bigger problem is that it spreads false information to increase investors' anxiety and lures individuals into paid chat rooms. The page stated, "On July 31, the Korean stock market plans to withdraw funds worth 50 trillion won." After confirming with the Korea Exchange, this was found to be false. Despite being a poorly made page with even grammatical errors, it is known that quite a few people were deceived. A Korea Exchange official said, "Cases of impersonating the Korea Exchange occur frequently," adding, "Unless financial damage occurs, we cannot report it to financial authorities, so if we can verify the webpage, the legal office takes action for copyright infringement."

Moreover, impersonation cases involving celebrities and others are also rampant. Kim Dong-hwan, chairman of E-Broadcasting and a well-known host of Sampro TV, publicly stated last year that he does not give investment advice after sharing a Facebook page impersonating him. He also warned the public on the 7th after receiving suspicious messages suspected to be from paid chat rooms. Chairman Kim expressed concern, saying, "Now it has come to this, and I worry about what might happen around the time the cold wind blows," adding, "I shudder even at being called 'teacher.'"

As impersonation cases of investment experts, celebrities, or specific institutions frequently appear on social media (SNS), not only do the impersonated parties face criticism, but there is also a high risk of innocent victims being produced. Unfair trading practices are becoming as sophisticated as voice phishing. However, it is practically difficult for financial authorities to intervene. Under current law, impersonating a celebrity solely to lure investors for unjust gains does not provide legal grounds for punishment.

An official from the Financial Supervisory Service explained, "Financial authorities can only intervene if the Capital Markets Act is violated," adding, "According to Article 178 of the Capital Markets Act, unfair trading is defined as obtaining unjust profits by committing fraud related to the trading or for the purpose of trading financial investment products."

As non-face-to-face contact online increases and its impact grows, there are calls to punish impersonation itself to close this loophole. There have been attempts in this direction. In July 2020, Han Byung-do, a member of the Democratic Party of Korea, proposed an amendment to the Information and Communications Network Act to impose up to one year imprisonment or a fine of up to 10 million won for impersonation.

However, the amendment is currently pending in the National Assembly's Science, Technology, Information and Broadcasting Committee. While sanctions against impersonation are necessary, there are objections that criminal punishment is excessive. This is based on the fundamental principle under criminal law that the severity of punishment should correspond to the degree of responsibility. The Korea Communications Commission expressed concerns about excessive expansion of criminal penalties in Han Byung-do's amendment and stated that "careful review is necessary."