Designing the "Korean-Style Plea Bargaining" System
Providing Law Enforcement with Effective Tools to Combat Financial Crimes
Partner attorney Jaebin Cho of Barun Law LLC is being interviewed at Barun Law LLC in Gangnam-gu, Seoul on the 26th of last month. Photo by Jinhyung Kang
The capital market, including finance, the economy, and virtual assets, is becoming increasingly sophisticated. As a result, the government is introducing various regulations and enforcement mechanisms to prevent unfair trading. Additionally, investigative agencies such as the prosecution and police are moving swiftly to crack down on related crimes through investigations.
As the government and investigative agencies demonstrate a strong commitment to sanctioning unfair trading in the capital market, an increasing number of individuals are coming under investigation. In order to address this so-called "judicial risk," companies are turning to large law firms, but it is not easy to find experts in this field. This is because there are few individuals who have accumulated expertise by investigating financial and economic crimes related to the capital market.
Jaebin Cho, a partner attorney at Barun Law LLC, is recognized as an expert in this field. As a prominent investigator in the prosecution, Cho was appointed as a prosecutor in the Special Investigation Division 2 of the Seoul Central District Prosecutors' Office in 2004. He subsequently served in the Samsung Group Slush Fund Special Investigation Headquarters, was dispatched to the BBK Special Prosecutor's Team, and held positions as Deputy Chief of the Special Investigation Division 3 and Chief of the Special Investigation Division 4 at the Seoul Central District Prosecutors' Office. In 2016, as Chief of the Special Investigation Division 4, he investigated embezzlement allegations against Lotte Group executives.
Attorney Cho is credited as the key architect behind the implementation of the judicial cooperation sentencing reduction system, known as the "Korean-style plea bargaining," which has been applicable to capital market law violations since January last year. While serving as a prosecutor dispatched to the Capital Market Investigation Unit of the Financial Services Commission in 2020, Cho collaborated with officials from the Financial Services Commission to design this sentencing reduction system for judicial cooperators.
The following is a Q&A with Attorney Cho.
-You are the head of the Financial Crime Response and Financial Regulation Team, the Virtual Asset Criminal Response Team, and the Delisting Response Task Force. What kind of work do you mainly handle?
=I mainly focus on responding to sanctions imposed by financial authorities on financial institutions and handling criminal cases involving companies and financial institutions, such as violations of the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement). To date, I have been successful in nearly all the cases I have handled. The Financial Regulation Team provides advisory services on sanctions and licensing issues imposed by the Financial Services Commission or the Financial Supervisory Service. The Delisting Response Task Force advises listed companies to prevent delisting. Specifically, when KOSDAQ-listed companies fail to meet listing requirements, they may face substantive or formal delisting, for example, if their audit opinions are rejected or their revenue falls below the minimum threshold for several consecutive years. In such cases, the law firm is retained to conduct a comprehensive review of the company's financial and management situation, persuading the committee with arguments to maintain the listing and proceeding with procedures to prevent delisting.
-It appears that you have often succeeded in having arrest warrants dismissed at the prosecution investigation stage or even preventing criminal charges from being filed in the first place. Do you have a particular strategy?
=So far, I have managed to have most of my clients' arrest warrants dismissed by uncovering the truth and providing assistance. The key is a thorough understanding of the facts and meticulous legal analysis. I put my utmost effort into drafting pre-arrest hearing opinions to persuade the warrant judge. Writing these opinions is so intense that I typically lose 2 to 3 kilograms in the process. The most important factor is that clients seek legal expertise quickly, even at the witness stage. The sooner one responds to a criminal case, the better. There are many ways to minimize damage in the early stages of an investigation. As an attorney with extensive experience in anti-corruption investigations at the prosecution, I can accurately assess the case and the client's situation and provide an appropriate response.
-As the virtual asset market grows, related crimes are also increasing, and demand for law firms in this area is rising. How are you responding to this trend?
=Our law firm, including myself and more than 10 attorneys such as Seohee Han, who has specialized in digital assets, virtual asset service providers (VASPs), and stablecoins since 2017, has established the Virtual Asset Criminal Response Team. I currently serve as an advisory committee member for the Digital Asset Exchange Alliance (DAXA), a sanctions review committee member at the Financial Intelligence Unit (FIU) responsible for regulatory actions against the virtual asset industry, and a member of the Financial Development Deliberation Committee (Financial Industry and Innovation Subcommittee) under the Financial Services Commission's Digital Finance Policy Bureau. I have also served as legal counsel for Coinone, a virtual asset exchange, and Wemade, the issuer of WEMIX, further enhancing my expertise in this field.
Partner lawyer Jaebin Cho of Barun Law Firm is posing before an interview at Barun Law Firm in Gangnam-gu, Seoul on the 26th of last month. Photo by Jinhyung Kang
-If the prosecution reform bill being promoted by the government and the ruling party passes, what do you expect will happen to financial and economic crimes in the future?
=Investigations themselves will become difficult or impossible. In reality, the police lack experience and have never handled such cases, so they cannot conduct proper investigations. If the prosecution is no longer allowed to directly investigate financial and economic crimes and the so-called Serious Crimes Investigation Agency (SCIA) takes over, I anticipate serious problems, including prolonged delays in investigations and difficulty in securing convictions. Most financial and economic crimes are complex and specialized cases that are reported or referred for investigation by financial authorities. Attorneys handling such cases must also have expertise in the field. However, I do not believe that police officers or investigators in the newly established SCIA, who have not previously investigated such cases, will be able to conduct proper investigations. It is nearly impossible for investigators with no experience in complex and specialized cases to investigate over a long period, refer the case to the prosecution, and for prosecutors to indict and maintain charges properly. The result will likely be a high rate of acquittals and significant difficulty in punishing offenders. If acquittals become widespread and offenders go unpunished in the financial and economic sector, the public will likely demand extraordinary measures.
-It is said that you made a significant contribution to the introduction of the judicial cooperation sentencing reduction system (plea bargaining). What has been the impact of this system in the financial and capital markets?
=While serving as Director of Capital Market Investigation Planning at the Financial Services Commission around 2020, I designed the judicial cooperation sentencing reduction system to eradicate organized unfair trading. Under the Capital Markets Act, individuals who voluntarily surrender, provide information leading to the arrest of offenders, testify or provide statements during investigation or trial regarding their own or others' criminal acts, or submit evidence proving criminal acts can be exempted from or receive reduced criminal penalties. This system is a highly efficient crime deterrent that leverages human nature, encouraging offenders to come forward and confess their crimes. It also creates distrust among offenders, as they know they can be betrayed at any time, thereby undermining criminal organizations from within. Because this system achieves maximum results at minimal cost, advanced countries have adopted and implemented it. I hope the system will become established by receiving accurate internal reports, verifying them quickly, prosecuting promptly, and recovering criminal proceeds in a timely manner.
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