The financial authorities are set to strengthen their response to unfair trading in the capital markets, centering on the Joint Task Force for Eradicating Stock Price Manipulation, which has reached its one-year anniversary. They plan to establish a communication data request authority, expand the scope of principal confiscation, and implement an artificial intelligence (AI)-based market monitoring system for swift detection and strict sanctions.
On July 8, the Financial Services Commission (FSC) held a meeting at the Korea Exchange, chaired by Chairman Lee Ok-won, to review the achievements of the Joint Task Force in its first year and outline future operational directions.
According to the FSC, the task force has uncovered over ten major unfair trading cases since its launch in July last year, including long-term price manipulation by super-rich individuals, insider trading by senior executives of securities firms, and misuse of undisclosed information by corporate disclosure officers. The task force has reported these cases to the prosecution, and in two instances, it imposed fines in advance to recover illicit gains.
Investigations into multiple cases of price manipulation and front-running are ongoing, with evidence being secured through searches in significant cases.
The Joint Task Force, which began with 36 members from the FSC, the Financial Supervisory Service, and the Korea Exchange, expanded to 62 members in January and increased to 90 in the first half of this year, with plans to further grow to 100 members.
To enhance its investigative capabilities against unfair trading, the FSC will also strengthen its investigation and sanctioning authority. New powers will be introduced for investigators to request communication data to prevent evidence destruction and verify information transmission routes. Additionally, a proposed amendment to the Capital Markets Act will be submitted in the third quarter to expand the scope of principal confiscation and recovery to include insider trading and unfair transactions.
The FSC is also considering streamlining the requirements and procedures for imposing fines and extending the suspension period for accounts involved in unfair trading.
The market monitoring system will be advanced with a focus on AI. The FSC plans to develop an AI system that detects unfair trading through platforms like YouTube and social media, analyzing trading patterns in conjunction with detection conditions. An 'incident analysis AI agent' will also be introduced to provide analytical results based on detection criteria.
Furthermore, the FSC aims to actively utilize administrative sanctions, such as trading restrictions on financial investment products and limitations on the appointment of executives at listed companies, to expel habitual offenders from the market. Plans are also in place to enhance IT system integration and forensic equipment among institutions.
Chairman Lee Ok-won stated, 'Over the past year, the Joint Task Force has been at the forefront of securing trust in the capital markets by swiftly detecting and strictly sanctioning illegal activities. We will respond to the increasingly organized and sophisticated crimes of stock price manipulation with the principles of swift detection, thorough investigation, and zero tolerance, firmly establishing the notion that stock price manipulation leads to ruin in the market.'
* This article has been translated by AI.
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