Starting April Next Year, Financial Company Executives Will Face a 5-Year Appointment Ban for Unfair Trading and Illegal Short Selling

Difficulties in Appointing Executives at Non-Listed Financial Companies
If Price Impact Is Significant, Financial Investment Also Limited to Maximum 5 Years

Lotto analysts and number analysis companies explain that it is possible to predict the next winning numbers by analyzing the winning numbers that have occurred so far, but Professor Kim pointed out that this is an impossible method that overlooks the 'independence,' a basic concept of probability. Illustration = Asia Economy DB

Starting from April next year, if unfair trading or illegal short selling occurs, not only listed companies but also the appointment of executives at financial companies will be restricted for 5 years. If unfair trading or illegal short selling significantly affects market prices or quotations, trading of financial investment products will also be restricted for up to 5 years.

The Financial Services Commission announced on the 27th that it will give prior notice of legislative and regulatory changes regarding the enforcement decree and capital market investigation work regulations, which are subordinate rules of the amended Capital Markets Act effective from April 23 next year, until February 5 next year.

These subordinate rules will be implemented from April 23 next year after review by the Regulatory Reform Committee, the Ministry of Government Legislation, the Vice-Ministerial Meeting, and approval by the Cabinet Meeting.

According to the amendment, if unfair trading or illegal short selling occurs, the appointment of executives will be restricted for 5 years not only in listed companies but also in financial companies. A fine of 100 million KRW will be imposed on those who violate the executive appointment restriction or appoint restricted persons as executives.

If unfair trading or illegal short selling significantly affects market prices and attempts are made to conceal or minimize the violation, trading of financial investment products may be restricted for up to 5 years.

However, exceptions apply to the disposal or exercise of rights of financial investment products held before the trading restriction and unrelated to unfair trading, transactions due to external factors such as inheritance, stock dividends, or mergers, and the purchase or sale of debt securities or other financial investment products with low risk of unfair trading.

A fine of 100 million KRW will be imposed for violating the financial investment product trading restriction, and a fine of 18 million KRW will be imposed for failing to notify the request for trading by the restricted person, refusal, or processing results.

The payment suspension measure, which the Financial Services Commission can request from financial companies for up to one year for all or part of accounts suspected of being used for unfair trading, can be lifted if other legally equivalent measures such as seizure, provisional seizure, or provisional disposition orders have been imposed, or if investigative agencies withdraw the payment suspension request.