The financial authorities plan to strengthen the responsibilities of the Securities and Futures Commission to prevent unfair transactions in capital markets, such as stock manipulation. This means that the details of sanctions determined by the Securities and Futures Commission will be made more detailed and actively disclosed to the public. The Securities and Futures Commission is the highest decision-making body under the Financial Services Commission that determines the level of punishment for unfair transactions like market manipulation.
The Securities and Futures Commission has imposed sanctions that are either harsher or lighter than those proposed by the Financial Supervisory Service, depending on the severity of the case. With this improvement, the burden of reducing penalties is expected to increase as the Securities and Futures Commission's actions will be publicly available.
However, the Financial Services Commission showed a skeptical attitude toward disclosing the names of those who violated the Capital Markets Act in the market. This is due to concerns about side effects if the Financial Services Commission were to make public the list of those sanctioned by the Securities and Futures Commission who are in disputes in court.
According to the '2024 National Audit Results Correction and Processing Report' submitted to the National Assembly on the 2nd, the Financial Services Commission plans to establish a separate homepage for unfair transactions during the first half of this year. This is to quickly disclose specific examples and types of unfair transactions, such as market manipulation, insider trading, and fraudulent transactions.
Currently, the decisions made by the Securities and Futures Commission regarding unfair transactions are communicated to the public through press releases. The nature of the allegations, the significance of the actions, and future plans are announced through the media. After that, the information is made available on the Financial Services Commission's website two months after the Securities and Futures Commission meeting concludes. View counts range from 10,000 to 30,000.
Once the homepage is established, decisions by the Securities and Futures Commission are expected to be made public in greater detail. The Securities and Futures Commission assesses the severity of violations of the Capital Markets Act and determines fines and penalty surcharges. If circumstances for reduction or aggravation are identified during this process, it can exercise discretion to lower or raise the level of sanctions. With these reforms, the discretion used to reduce fines and penalty surcharges is expected to diminish due to the public disclosure of actions taken by the Securities and Futures Commission.
The Financial Services Commission noted, "We will strengthen accountability for the actions of the Securities and Futures Commission regarding unfair trading activities such as abnormal stock price surges."
Starting from the 23rd of this month, enhanced fines for unfair transactions will be applied. This is a result of the financial authorities amending relevant laws over the past two years to advance the capital market. In the past, those who committed crimes such as market manipulation had to return 3 to 5 times the amount of illicit profits, but now the level of penalty surcharges will increase to 4 to 6 times the amount of illicit profits.
The means of sanctions will also diversify. Until now, there have been no significant administrative sanctions available aside from penalty surcharges for manipulating stock prices. In the future, the Financial Services Commission will be able to restrict new transactions of the offender's securities or derivatives and may block the appointment and reappointment of executives at financial companies, including listed companies, banks, insurance companies, mutual savings banks, and specialized credit finance companies, for up to five years. Accounts involved in unfair transaction activities can be frozen for a maximum of one year.
However, the financial authorities have shown a passive attitude toward disclosing the names of individuals who take undue profits using undisclosed information in the stock market. The Financial Supervisory Service reported to the National Assembly that "disclosing the list of violators could negatively impact future investigations and trials," noting that there are concerns about unforeseen side effects. They also stated that they would carefully review whether to implement such a measure after consulting with the Financial Services Commission.
This means that there is a possibility that corporate or individual financial transaction information could be misused, and that identities cannot be disclosed before charges are confirmed in court. Even now, the Securities and Futures Commission minutes anonymize the names of those accused and corporate names.
Three years ago, the Financial Services Commission stated it would publish the names and titles of illegal short-sellers (naked short sellers) on its website, citing the strong interest of individual investors.
However, the list has yet to be made public. Recently, the Financial Services Commission announced measures against the global investment banks BNP Paribas and HSBC for illegal short selling without borrowing shares while anonymizing their names.