New penalty for up to twice the amount of unfair profit
(Seoul = Yonhap Infomax) Reporter Jeong Ji-seo = In the future, if unfair transactions such as market price manipulation, use of undisclosed information, or illegal short selling are discovered, trading in investment products as well as opening stock accounts will be prohibited for up to 10 years.
If an executive of a listed company violates the unfair trade rules, he or she will be subject to a proposal for the appointment of an executive for 10 years, limiting his/her activities.
On the 25th, the Financial Services Commission announced a plan to strengthen the capacity to respond to unfair trade in the capital market.
In the past, unfair trade in the capital market has become more and more complicated, but there were many voices pointing out the effectiveness of the punishment.
In particular, as the use of undisclosed material information by executives of listed companies that require high responsibility and the repetition of illegal acts by former unfair traders frequently occur, many ordinary investors suffer financial damage as a result, and there are cases of undermining trust in the Korean capital market. There were many.
In response, the government decided to amend the Capital Market Act to significantly strengthen its response capabilities by diversifying sanctions to eradicate unfair trade in the capital market that harms many investors and undermines market confidence.
First of all, the Securities and Futures Commission under the Financial Services Commission can designate those who violate the rules of unfair trade under the Capital Markets Act, including the use of undisclosed information, market price manipulation, and unfair trade, as ‘subject to trade restrictions’. Any act of disrupting the market order, short selling without borrowing, and all other types of unfair trade may be designated as subject to trade restrictions.
If you are subject to trading restrictions, you will be banned from opening new stock accounts for up to 10 years.
In addition, new trading of all products traded in the capital market, whether listed or not, such as securities such as stocks and bonds, as well as derivatives, is prohibited.
However, some unavoidable transactions such as purchases for repayment of large stockholders, sales of existing products, indirect investments such as exchange-traded funds (ETFs), and acquisition of stocks through stock dividends are allowed as an exception.
The transaction restriction period is determined by the SSC with a maximum range of 10 years. The restriction period will be differentiated according to the content, degree, period, and number of violations for each individual case.
In the future, the SSC will send the information of those subject to transaction restrictions to the exchange, and the exchange will disseminate it to all securities companies through the market monitoring portal.
If a brokerage company permits a person subject to trade restrictions, the brokerage company as well as the trader are subject to a fine for negligence.
If the SSC designates a person subject to trade restrictions, appointment and activities as executives of listed companies are restricted for up to 10 years.
Violators may be designated as subject to appointment restrictions regardless of their rank. Even if the employee is an employee at the time of the violation, if the degree of illegality is large, it is necessary to block the possibility of being appointed as an executive in the future.
If the offender is already serving as an officer, the officer will be disqualified. It applies to all listed companies on the KOSPI, KOSDAQ, and KONEX markets, and applies to financial companies regardless of whether they are listed or not.
The SSC plans to determine the period of limitation of appointment in the range of up to 10 years in the same way as the capital market transaction restrictions.
Financial authorities have also tightened monetary sanctions and punishment.
Accordingly, the method of calculating the amount of unfair profit, which is the standard for unfair trade sanctions, is also specified in the Act.
Penalties for three major unfair trades that are currently subject to criminal punishment will also be increased up to twice the amount of unfair profits.
In principle, the FSC imposes a penalty surcharge following being notified by the prosecution of the results of the investigation and disposition on the suspects of unfair trade. However, it is possible to impose a penalty surcharge before consultation with the prosecution or, if one year has elapsed, before receiving notification of the results of the investigation and disposition from the prosecution.
The FSC explained, “We will push for legislation to amend the Capital Market Act related to restrictions on capital market transactions and the appointment of listed companies within this year.”
jsjeong@yna.co.kr
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This article was served at 12:00 pm on the Infomax financial information terminal.
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