The financial authorities plan to launch the 'Joint Response Team for Eradicating Stock Price Manipulation' on the 30th to swiftly combat unfair trading, including stock price manipulation, while also strengthening penalties, including imposing penalty surcharges at 'ruinous' levels for accounting fraud.
On the 9th, the Financial Services Commission, Financial Supervisory Service, and Korea Exchange held a joint briefing in Yeouido, Seoul, and stated this. This announcement is a follow-up to President Lee Jae-myung's directive to improve the system to prevent unfair trading in the capital market and to expand organizations and personnel during his visit to the Exchange on the 11th of last month.
On that day, the financial authorities announced they would strengthen the level of penalties against unfair trading, such as stock price manipulation, while also announcing that they would impose strict penalties against accounting fraud. Accounting fraud refers to the act of intentionally manipulating information in accounting books to make management performance appear better than it is.
Lee Yoon-soo, a Commissioner at the Financial Services Commission, said at the briefing, “In addition to stock price manipulation and false disclosures, accounting fraud is also a factor that disrupts the order of the capital market and muddy the waters,” adding, “We are preparing effective measures to strengthen penalties in this regard, and will announce them soon.”
In particular, the Commissioner emphasized, “We will improve the system so that penalty surcharges akin to 'ruinous' levels can be imposed on major shareholders or executives who intentionally commit accounting fraud.”
Currently, monetary and non-monetary penalties against unfair trading actors are already in effect. A penalty surcharge system was introduced in January of last year, which imposes penalties up to twice the amount of unjust gains, and criminal penalties proportional to unjust gains have been strengthened from more than three times and less than five times to more than four times and less than six times. Accounts under suspicion of unfair trading can also be suspended for up to one year, and the traders' ability to transact in financial investment products and appoint executives is restricted for up to five years.
In addition, the financial authorities decided to directly announce the names of violators and the securities involved in relation to penalties for unfair trading in the future. This includes insider trading, price manipulation, and fraudulent transactions. When initially filing a report and notifying, the violators will not be disclosed, but subsequent measures such as penalty surcharges under the 'one-strike-out' policy will be disclosed without delay.