Serious Crimes Investigation Agency Without Prosecutors Vulnerable to New Economic Crimes [The Plaintiff as Detective] ④

Capital Markets and Financial Securities Crimes
Complex Legal Issues Intertwined
Require In-Depth Analysis from the Initial Investigation
Abolition of Supplementary Investigation Rights
Shakes the Cooperative Structure Between Prosecut

Editor's NoteWith the bill to abolish the Prosecutors' Office set to pass the National Assembly plenary session on the 25th, people on the ground are engaged in disputes that are almost akin to private lawsuits. The government advocates for "prosecution reform without harm to the public," but the reality experienced by victims of criminal cases is different. Our coverage examines the confusion that has emerged in the field since the adjustment of investigative powers between the prosecution and the police, and diagnoses the challenges the public will face a year from now in the era of the Serious Crimes Investigation Agency.

One area of concern regarding potential investigative gaps following the launch of the Serious Crimes Investigation Agency and the abolition of the Prosecutors' Office is new types of economic crimes, such as the case involving Sunyoung. In cases of cryptocurrency fraud, violations of the Capital Markets Act, financial and securities crimes, and fair trade incidents, it is necessary to delve into complex legal issues from the very first stages of investigation. Determining the requirements for detention and assessing the existence of collusion must be meticulously reviewed even before the case is transferred. There are concerns within the legal community about whether these processes can be completed under the Serious Crimes Investigation Agency system, which excludes the prosecution.

In fact, in cases involving capital markets and financial securities crimes, the direction of police investigations and their legal interpretations are still closely intertwined with the prosecution's requests for supplementary investigations. This structure-where the calculation of unjust gains and the scope of the Capital Markets Act are reviewed together, leading to investigation, transfer, and warrant applications-has allowed complex economic crimes to reach indictment relatively quickly, thanks to the "right to request supplementary investigation" that connects the prosecution and the police.

The problem is that this cooperative structure may be shaken by the reorganization of financial authorities, the abolition of the Prosecutors' Office, and the elimination of the right to request supplementary investigations. The existing fast-track process, which moves from exchanges to the Financial Supervisory Service, then to the Financial Services Commission, and finally to the prosecution, will inevitably be revised due to amendments to the Government Organization Act.

Until now, the Korea Exchange would detect abnormal transactions and notify the Financial Supervisory Service, which would then analyze disclosure materials and financial transaction records to specify criminal suspicions. The Financial Services Commission would review the case and, through a fast-track process, refer it to the prosecution. The prosecution would then conduct compulsory investigations such as search and seizure, and, with the assistance of personnel dispatched from the National Tax Service, the Korea Securities Depository, the Korea Deposit Insurance Corporation, and the exchange, proceed through a step-by-step process: detailed data analysis, investigation of related parties, legal review, and ultimately indictment.

The 2023 stock price crash triggered by SG Securities was a textbook example of this collaboration. The Seoul Southern District Prosecutors' Office formed a joint investigation team with the Financial Services Commission and the Financial Supervisory Service, arrested the ringleader within 20 days of the incident, and uncovered 730 billion won in illicit gains.

Fair trade cases are similar. They require an understanding of legal concepts such as "relevant market," "restriction of competition," and "impairment of fair trade." Meticulous evidence collection at the corporate group level is necessary for cases like collusion, unfair internal transactions, and unfair trade practices. At this stage, it is also important to execute warrant applications swiftly. The procedure-from the Fair Trade Commission's report to the Prosecutor General, to receipt by the Supreme Prosecutors' Office, assignment to local offices, investigation and indictment, and maintenance of the public prosecution during criminal trials-will also need to be significantly overhauled with the launch of the Serious Crimes Investigation Agency.

A chief prosecutor commented, "When it comes to non-political cases, there is no justification for stripping away even the right to request supplementary investigations in the name of prosecution reform," adding, "It is necessary to preserve as much of the expertise of the existing joint investigation units as possible while seeking operational flexibility."