Financial Authorities, Exchange, and Prosecutors Hold 2nd 'Josimhyup'
Focused Discussion on Telegram and SNS-Linked Leading Rooms
On the 23rd, the Financial Services Commission and the Financial Supervisory Service announced that they are investigating 225 cases of unfair capital market transactions, including market manipulation and insider trading.
On the same day, the FSC and FSS held the 2nd "Unfair Trading Investigation and Hearing Agency Council (Josimhyup)" at the Government Seoul Office together with the Korea Exchange and the prosecution to discuss key issues related to unfair trading.
Josimhyup is a consultative body aimed at establishing an organic and efficient response system to unfair trading, sharing investigation status and issues, and discovering cooperative tasks through a process of detecting charges and hearings (Exchange) → investigation (FSC and FSS) → prosecution (Prosecution).
According to the financial authorities on that day, investigations into 225 cases of unfair capital market transactions are underway as of the end of last month.
The Korea Exchange stated that it is conducting about 18 hearings per month on average (from April to August this year) regarding signs of unfair trading detected during market surveillance. The number of market alerts averaged 204 per month, and preventive measures averaged 511 per month.
The financial authorities also disclosed two major cases of actions taken related to unfair trading. The first case involved an internal employee of a listed company, A Entertainment, who used undisclosed material information to engage in Contracts for Difference (CFD?a type of over-the-counter derivative product that settles only the price difference without holding the actual asset such as stocks), earning approximately 250 million KRW in illicit gains, and was reported to the prosecution.
The second case involved raising funds by using shares of a company acquired through a no-capital merger and acquisition (M&A) as collateral, manipulating the market price, and making false disclosures to increase the stock price. This case was also reported to the prosecution. Notably, for the first time, the amount saved in financial costs by the suspect avoiding additional collateral payments (avoiding forced sale) was included in the illicit gains.
During this Josimhyup meeting, following the first meeting, the handling of leading room cases using social networking services (SNS) was also intensively discussed. The financial authorities plan to immediately report and notify investigative agencies to prevent destruction of key evidence such as Telegram chat rooms and support prompt investigations.
For systems and incidents that have a significant impact on the market, the "concentrated hearing system" will be activated, which actively utilizes temporary Securities and Futures Commission meetings or briefings to conduct focused hearings and reach conclusions.
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