"From the 23rd, Unfair Trade May Result in Up to 5 Years of Transaction Restrictions"

Trading Restrictions and Executive Appointment Bans for Up to Five Years
Accounts Used for Illegal Activities May Be Suspended for Up to One Year

From the 23rd of this month, individuals who violate the Capital Markets Act through unfair trading or illegal short selling will face restrictions on trading financial investment products for up to five years, and their appointment as executives of listed companies or financial firms will also be restricted. Additionally, accounts used for illegal activities will be suspended from payment for up to one year.

On the 14th, the Financial Services Commission announced that the amendment to the "Enforcement Decree of the Capital Markets and Financial Investment Business Act," which includes these provisions, was approved at the Cabinet meeting.

According to the amendment, individuals who engage in unfair trading or illegal short selling will be restricted from trading financial investment products for up to five years. The restriction period will be detailed based on factors such as the impact of the violation on market prices, the amount of short selling orders, and the size of illicit gains.

However, the disposal or exercise of rights related to financial investment products held prior to the trading restriction and unrelated to specific unfair trading acts are exceptions. Transactions resulting from external factors such as inheritance, stock dividends, mergers, and trading of financial investment products with low risk of unfair trading, such as debt securities, are also defined as exceptions.

Furthermore, individuals who commit unfair trading or illegal short selling will be restricted from being appointed as executives not only of listed companies but also of financial companies (banks, insurance companies, mutual savings banks, and specialized credit finance companies) for up to five years. The restriction period will be determined by considering the impact of the violation on market prices, the amount of short selling orders, and the size of illicit gains.

It is also stipulated that the Financial Services Commission may request financial companies to suspend payments on accounts suspected of being used for specific unfair trading acts for up to one year.

The Financial Services Commission explained, "Through this institutional improvement, various non-monetary sanctions introduced and operated by major overseas countries will be adopted. It is expected to minimize the concealment of illicit gains, reduce incentives for unfair trading, and contribute to investor protection and the establishment of a sound trading order."