[Inside Chodong] The Open Capital Market and Its Adversaries

"All That Matters Is My Own Gain": Listed Company Owners
Unqualified Fund Managers and Investment Officers
"No, Not During My Term": Public Officials
A Judicial System Too Lenient on Financial Crimes

From 'extractive finance' to 'productive finance.' From real estate to stocks.

A massive money move has become a reality. The KOSPI index is heading toward 5,000, and an enormous amount of capital is waiting to be invested in the venture market. The higher the mountain, the longer the shadow. There are concerns that the capital market, which has not matured in terms of people or systems, may experience even more problems due to its rapid expansion. Although the capital market has opened wide, its enemies are still thriving within.

The greatest enemy of the capital market is the greedy owner (majority shareholder) of a listed company whose sole goal is an IPO, but who disregards other shareholders after listing. As stock prices have risen recently, their tricks have increased. With the third amendment to the Commercial Act likely to introduce a mandatory cancellation of treasury shares, there has been a surge in cases where owners quickly exchange shares with friendly parties. There are also reports that some owners are taking out stock-backed loans based on the higher share prices to make personal investments. While countless minority shareholders worry, only these owners are smiling.

The issue of some fund managers' (investment officers') qualifications, which has been pointed out since the heyday of public offering funds, remains serious. This year, with the introduction of the National Growth Fund, IMA, and BDC, liquidity in the venture market will increase significantly, but only a handful of investment officers are truly capable of evaluating deep tech fields such as AI and biotech. Especially in the case of venture capital firms, there are many companies to manage but too few people to do the work-a structural problem. Lacking the ability to properly select investment targets, there is still a practice where friendly investment officers stick together and only support the companies they have invested in. Their poor choices could lead to nationwide losses years down the road.

Because of the excessively conservative bureaucracy of some government officials, there are more and more cases where innovations possible in the United States and China are impossible in Korea. A prime example is virtual assets. In the future, as AI enables a variety of micro-purchases, virtual asset payments will become essential. However, Korea's policy remains focused on regulation. There is even a proposal that coin exchanges cannot hold more than 15% of voting shares. In the case of Tada, regulation could be understood since its impact was limited to domestic industries. However, if innovation is blocked in globally competitive fields, the market will be taken by American and Chinese companies.

Finally, it is necessary to point out the Korean judicial system's excessive leniency toward financial crimes. The reason why fraudsters have thrived in the KOSDAQ and junk bond markets is that they believed, "Even if I get caught, after spending four to five years in prison, I can change my life." Like in the United States, punishments for financial crimes should be so severe that no one would even dare to commit them. In reality, robbery and theft typically affect only one or two households, but financial crimes rob the future of hundreds or thousands of families. The Supreme Court's sentencing guidelines for securities crimes, which will be finalized in March, should be significantly strengthened and properly applied in actual trials.

In just one year, hundreds of trillions of won have moved. Too much money has flowed too quickly into a capital market still teeming with adversaries. From the second half of the year, side effects will erupt everywhere. We must respond before it is too late.