Amendment for Diversifying Sanctions on Unfair Transactions under the Capital Market Law
Legislative notice until February 5… Effective from April 23 next year,
Financial Services Commission,
,
, ‘(Seoul=News1) Reporter Park Seung-hee = Those who commit unfair transactions or illegal short selling will face up to a five-year ban on trading financial investment products, and a fine of 100 million won will be imposed for violations. To establish order in the financial market and foster consumer trust, financial companies will be added to the list of corporations restricted from appointing executives.’,
,
, ‘The Financial Services Commission announced on the 27th that it has issued a legislative notice and a regulatory amendment notice for the enforcement ordinance and business regulations under the Capital Market and Financial Investment Services Act.’,
,
, ‘Through the subordinate regulations of the amended Capital Market Act, specifics on △restrictions on trading financial investment products △restrictions on executive appointments in listed companies and others △restrictions related to account payment suspensions have been detailed.’,
,
, ‘Under the amended Capital Market Act, individuals involved in specific unfair transactions will face trading restrictions on financial investment products for up to five years. The amended subordinate regulations further detail this by subdividing the restriction period based on factors such as the impact on stock prices, the amount of short-selling orders, and the size of illicit profits.’,
,
, ‘For example, if the violation has a significant impact on stock prices and there are aggravating factors such as submission of false documents to conceal or downplay the violation, the restriction can be set up to five years. If concerns are minimal or nonexistent regarding investor protection, maintaining fair trading order, or impact on financial institutions, reductions may be allowed.’,
,
, ‘However, exceptions are provided for the disposal or exercise of rights on financial investment products held before the trading restriction that are unrelated to the specific unfair transactions, acquisitions due to external factors such as inheritance or stock dividends, mergers, and trading of financial investment products like debt securities that have minor potential for unfair trading.’,
,
, ‘For those who violate the trading restrictions on financial investment products, a base fine of 100 million won has been set. A fine of 18 million won is set for those who fail to notify the request or refusal of transactions by restricted parties.’,
,
, ‘The amended Capital Market Act allows for the designation of specific corporations as those from which executive appointments are restricted by Presidential Decree. The enforcement ordinance adds financial companies, as defined under the law on the corporate governance of financial companies (banks, insurance companies, mutual savings banks, credit finance companies, etc.), to the list of restricted corporations.’,
,
, ‘Moreover, fines of 100 million won are set as the base amount for those who violate the executive appointment restrictions, those who appoint restricted individuals as executives or fail to dismiss them, and those who do not comply with the Financial Services Commission’s dismissal demands.’,
,
, ‘The amended Capital Market Act also provides that the Financial Services Commission can impose a payment suspension on financial institutions for accounts suspected of being used for unfair trade activities for up to one year, with details defined in the subordinate regulations.’,
,
, ‘The amended subordinate regulations add circumstances in which payment suspensions can be lifted, such as when execution orders for seizure, provisional seizure, or provisional disposition under the Civil Execution Act are enforced, when investigative agencies withdraw payment suspension requests, and when funds have been transferred to an account already under payment suspension due to enforcement of exempt claims like support payments.’,
,
, ‘A fine of 100 million won is set for financial institutions that fail to implement payment suspension measures, and 18 million won for those that do not notify relevant parties after imposing a suspension.’,
,
, ‘A representative from the Financial Services Commission stated, “With the implementation of the amended Capital Market Act and its subordinate regulations, swift measures against unfair transactions and illegal short selling become possible. The introduction of diverse sanctioning methods is expected to minimize the concealment of illicit profits and reduce the motivation for unfair trading, thereby contributing to investor protection and the establishment of an orderly trading environment.”‘,
,
, ‘The legislative notice and regulatory amendment announcement is ongoing from the 27th until February 5 of the following year. After passing through reviews by the Regulatory Reform Committee, the Ministry of Government Legislation, and approval by the Vice-Ministerial Meeting and the State Council, it is expected to be implemented on April 23 of next year.\n’]