Wed. Feb 1st, 2023

Regulation HK

Financial Regulator

Korea: Tougher Penalties for Unfair Trading Expected Within H1

1 min read

Those engaged in unfair trading activities would face either a prison sentence of at least one year or a fine of between three and five times profits.

South Korea’s FSC (Financial Services Commission) has reportedly agreed on an amendment bill that will strengthen the penalties regime for unfair trade practices.

The amendment bill seeks to revise the FSCMA (Financial Investment Services and Capital Markets Act) so that those engaged in unfair trading activities in the capital market would face either a prison sentence of at least one year or a fine of between three and five times profits.

The penalties would be applicable to those found guilty of engaging in three types of unfair trading practices ― insider trading, price manipulation, and illegal trading.

The FSC had said in September that it was planning to propose a more effective penalties regime for unfair trade practices in capital markets, amid growing calls from lawmakers and the public for stock traders involved in illegal activities to face tougher punishment.

Under the FSCMA, those caught violating the law only receive criminal punishment rather than fines. Typically their gains are not confiscated immediately until a court makes a decision, which generally takes at least a couple of years.

In the five years since 2017, 93 percent of 274 unfair trading cases did not lead to fines, according to FSC data.

The FSC and lawmakers are reportedly moving to speed up the passage of the FSCMA revision act before H2 this year.

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