"Jackpot Upon Listing"? Beware of Unlisted Stock Solicitations... Financial Supervisory Service Raises Alert to 'Warning'

Consumer Alert Raised to "Warning" After Repeated Scams Since Last June
Solicitations via Text and SNS... Suspect Fraud if Disclosure Documents Are Missing

On January 12, the Financial Supervisory Service announced that it has raised the consumer alert level for unlisted stock initial public offering (IPO) investment scams from "Caution" to "Warning." The alert level was raised due to repeated similar complaints.

According to the Financial Supervisory Service, recently, fraudulent schemes involving the "lure→deception→use of shills" method have been occurring across various unlisted stocks.

First, illegal entities impersonating domestic small financial companies or YouTube investment experts pre-purchase unlisted stocks and then invite large numbers of people to illegal investment chat rooms via text messages or social networking services (SNS).

They use provocative phrases such as "free recommendations for skyrocketing stocks" and provide a small number of shares (about 1 to 5) of stocks scheduled for listing for free, offering investors a taste of successful small-scale investments.

Subsequently, they stimulate expectations by using phrases like "listing is imminent" and "guaranteed buyback and principal protection if listing fails" regarding the recommended unlisted stocks. At the same time, they upload manipulated investor relations (IR) materials and false information to blogs and online news outlets.

In addition, they disguise themselves as third-party investors or major shareholders to induce large reinvestments. They claim to be securing shares and promise to purchase them at a high price once a sufficient quantity is secured.

They also provide instructions in advance on how to respond during transaction verification calls (such as remittances under the pretense of deposits or living expenses), allowing them to evade detection by the financial company's abnormal transaction detection system (FDS).

Using this method, they repeatedly commit the same crimes by switching to different unlisted stocks.

The Financial Supervisory Service advised that if someone encourages you to purchase unlisted stocks on the grounds that listing is imminent, you should always suspect a scam. They also recommended exercising caution if the disclosure documents cannot be found on the Financial Supervisory Service's electronic disclosure system (DART).

The agency emphasized that legitimate financial institutions do not lure individuals into one-on-one chat rooms, emails, or text messages to make personalized investment solicitations.

A representative from the Financial Supervisory Service stated, "In cases where damages occur due to transactions with illegal entities, such cases are not subject to dispute resolution by the Financial Supervisory Service, so victims cannot receive relief," and added, "If you suspect impersonation, you must contact the financial institution's customer center to verify the facts."