Starting from the 23rd of this month, a payment suspension system will be newly introduced for accounts suspected of being used for unfair transactions or illegal short selling. Perpetrators of unfair transaction activities will be prohibited from trading financial investment products for up to five years. This restriction applies not only to listed companies but also to the appointment of executives in financial companies for five years.
The Financial Services Commission noted on the 14th that a revision bill of the Enforcement Decree of the Act on Capital Markets and Financial Investment, containing these details, was approved at the State Council meeting. This enforcement decree will take effect on the 23rd of this month, along with already revised capital market laws and capital market investigation regulations.
The revised capital market law stipulates that the Financial Services Commission can request financial companies to suspend payments for accounts suspected of being used for unfair transactions for up to one year.
The revision of subordinate regulations allows for the lifting of payment suspensions only in cases where measures equivalent to payment suspensions are imposed according to other laws, such as seizure, provisional seizure, or execution of injunction orders, or when the investigative agency withdraws the payment suspension request.
Financial companies that do not respond to payment suspension requests may be imposed fines based on 100 million won, and if they do not notify relevant matters to the account holder and the Financial Services Commission after the measures, they may incur fines based on 18 million won.
Additionally, the revised capital market law allows the Financial Services Commission to impose restrictions on trading financial investment products for up to five years for unfair trading and illegal short selling. The revision of subordinate regulations specifies this by segmenting the limitation period based on the impact of the violations on the market price, the amount of short-selling orders, and the scale of unjust profits.
It is stipulated that if the impact of a violation on the market price is significant or if grounds for upward adjustment occur, such as submitting false information aimed at concealing or downplaying the violation, the restriction period can be extended up to five years. Conversely, if there is no history of unfair transactions or if it is determined that the likelihood of recurrence is low, a reduction may be granted.
Furthermore, the Financial Services Commission decided to recognize exceptions to transaction restrictions for external factors such as acquisition of financial investment products due to inheritance, dividend distribution, or mergers. It was also noted that perpetrators of unfair transactions and illegal short selling would be restricted not only in listed companies but also in the appointments of executives in financial companies, including banks, insurance companies, and mutual savings banks.
The Financial Services Commission said, 'This will contribute to minimizing unjust profit concealment and reducing the incentives for unfair trading, thereby protecting investors and establishing a sound trading order.'