Financial Services Commission Actively Pursues Imposition of Penalties and Calculation of Unjust Gains in Unfair Trade Practices

Financial Services Commission Holds the 1st Financial Consumer Protection Council Meeting of 2024

The Financial Services Commission plans to actively carry out tasks such as imposing fines for unfair trading and calculating unjust profits as the number of capital market investigators increases.

On the 24th at 2 p.m., the FSC announced that it held the first 2024 "Unfair Trading Investigation and Adjudication Agency Council" at the Government Seoul Office, together with the prosecution, the Financial Supervisory Service, and the Korea Exchange, discussing strengthening sanctions on unfair trading, measures to improve investigation efficiency, and ways to enhance inter-agency cooperation.

The newly established council this year discussed ways to strengthen cooperation among agencies following the increase in FSC investigation personnel. On the 18th, the revision of the FSC organization was approved at the Cabinet meeting, resulting in an increase of three capital market investigators. Among the additional personnel, one will be newly hired as a fixed-term public official specializing in digital forensics.

Due to the amendment of the Capital Markets Act in January this year, it has become possible to impose fines on the three major types of unfair trading. The FSC plans to actively perform new tasks such as imposing fines, calculating unjust profits, and granting reductions for voluntary reporting through the increased investigation personnel. Furthermore, recognizing the need for cooperation between the FSC and prosecution for the harmonious operation of criminal penalties and fines, they intend to maintain close communication.

They also discussed diversifying sanctions for unfair trading and strengthening punishments. The council deliberated on measures to enhance the effectiveness of sanctions, including orders to restrict trading of financial investment products for up to 10 years, orders to restrict appointment of executives in listed companies and financial firms, introduction of payment suspension for accounts related to unfair trading, and raising punishment levels. They plan to strive for legislative discussions in the 22nd National Assembly.

Additionally, they talked about ways to improve the efficiency of unfair trading investigations. Currently, the investigation system for unfair trading consists of "detection and adjudication (Korea Exchange) → investigation (FSC and FSS) → administrative sanctions or prosecution/notification (FSC and Securities and Futures Commission) → investigation (prosecution) → criminal punishment (court)." Due to the nature of the unfair trading response system, timely investigations are essential to lead to effective punishment.

The participating agencies in the council agreed to discuss measures to improve investigation efficiency for timely detection and sanction of unfair trading and to continue strict responses to illegal short selling.