Employees of the Financial Supervisory Service who violated rules on trading financial investment products such as stocks were recently hit with fines. They either failed to report their trades, or were caught after subscribing to an initial public offering (IPO) through an unreported account and selling the shares after listing.
According to the financial sector on the 9th, at the 13th Financial Services Commission meeting held Jul. 9, fines were imposed on seven FSS employees who violated the "Regulations on Restrictions on Trading Financial Investment Products." The fines per person ranged from 100,000 won to 1 million won.
The FSS reviewed employees' trading records for financial investment products, and based on the findings, a disciplinary plan was submitted as an agenda item to the Financial Services Commission. Under the Capital Markets Act, FSS employees must notify the fact of account opening and their quarterly trade details when trading financial investment products, and they must use only one securities firm and one account in their own name.
According to the FSS's internal review and disciplinary plan, employee A did not transfer IPO shares to the reported account after subscription and used another account to trade them, then also failed to file a report. Employee B and six others did not report their quarterly trade details.
Cases of FSS employees violating rules on trading financial investment products are recurring every year. Last year, six people, and in 2023, 11 people were fined for violating the rules. Including violations of the code of conduct, the number grows further. According to data submitted by the FSS to Democratic Party of Korea lawmaker Kim Nam-geun, a member of the National Policy Committee, from 2020 to last year there were 97 cases—nearly 100—in which FSS employees violated laws or the code of conduct related to financial investment products. The FSS employee code of conduct prohibits, among other things, the use of securities firms' margin loans and transactions that exceed the transaction amount limit (50% of total salary in the previous year).
Early this year, the FSS improved its reporting system to allow automatic retrieval of stock transaction information, but due to consent issues over personal data, only about 70 users adopted it over six months. As of the end of last year, the FSS had 2,172 employees in total, and roughly 200 employees per quarter are said to trade financial investment products such as stocks. An FSS official said, "If an employee who does not consent to system data retrieval happens to miss a report by mistake, we will not be lenient as before."