Open Chat Rooms and YouTube Usage
Prohibition of Two-Way Paid Investment Advice
Comments Disabled, Only One-Way Communication Allowed
On August 22, the Financial Supervisory Service provided guidance on the prohibition of two-way business and unfair business practices by quasi-investment advisory firms ahead of the enforcement of the revised Capital Markets Act on August 14.
According to the revised Capital Markets Act, paid business using online two-way channels such as open chat rooms and YouTube is only permitted for registered official investment advisory firms.
For example, when giving investment advice, operation must be limited to one-way channels by blocking comments. In the case of paid business through text messages, KakaoTalk, Telegram, etc., registration as an investment advisory firm is required unless the possibility of two-way communication, such as reply functions, is fundamentally blocked.
If operated without compensation for free members, two-way channel operation is possible. This includes YouTube videos generating only advertising revenue and voluntary donations like 'Byeolpoongseon' from occasional applicants.
Unfair business practices are also prohibited. Quasi-investment advisory firms are banned from guaranteeing profits or compensating for losses.
Advertising is regulated as well. Quasi-investment advisory firms are prohibited from presenting false returns or advertisements that may cause confusion with financial companies.
The grounds for disqualification and ex officio cancellation of quasi-investment advisory firm registrations have been expanded from CEOs to executives, and re-entry restrictions have been strengthened.
Meanwhile, investors must also verify whether the target company is registered before entering into a quasi-investment advisory contract. Registration status can be checked on the Financial Supervisory Service’s ‘Financial Consumer Information Portal FINe’ website.
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