Financial authorities plan to expand the scope under which the special judicial police for the capital market can open investigations, so probes into unfair trading in the capital market can proceed quickly. They will also overhaul the investigation review committee system to prevent abuse of investigative authority.
On the 16th, the Financial Services Commission and the Financial Supervisory Service said they would give notice, from today through the 26th, of revisions to the Rules of Duty for the Special Judicial Police for the Capital Market that expand the scope for opening investigations. The revised rules are slated to take effect in April.
The core of the revisions is: ▲ expanding the scope for converting Financial Services Commission and Financial Supervisory Service investigation cases into criminal investigations ▲ reorganizing the composition of the investigation review committee, a public oversight mechanism ▲ defining requirements for convening the investigation review committee and placing items on its agenda ▲ and other improvements related to the operation of the investigation review committee.
First, any investigation case handled by the Financial Services Commission and the Financial Supervisory Service's investigation departments can be converted to a special judicial police investigation through the investigation review committee without a complaint or referral to prosecutors by the Securities and Futures Commission. Previously, when most investigation cases—except for those notified by the Korea Exchange (KRX) or joint investigations—were referred to prosecutors after a complaint or notification by the Securities and Futures Commission, prosecutors decided whether to open a special judicial police investigation.
The investigation review committee will remain a five-member body, but its composition has been adjusted. Going forward, from the Financial Supervisory Service, an employee designated by the governor from among the heads of investigation departments and a legal adviser will participate. Participation remains unchanged for the Financial Services Commission's head of capital market investigations, capital market investigation officer, fair market division head, or a grade-4 or higher official designated by a standing Commissioner of the Securities and Futures Commission (SFC).
The committee's operating procedures were also made more concrete. The investigation review committee can be convened if two or more Commissioners request it or if the Chairperson deems it necessary. Agenda items can be placed with the support of two or more Commissioners or by a sole proposal from the Chairperson.
In particular, to prevent future investigative delays, when the committee meets, same-day voting will be the principle. In unavoidable cases, written voting is allowed if the Chairperson attaches a statement of reasons. While ad hoc information sharing is blocked under the principle of separating investigation and investigative departments, if necessary, materials needed for investigations can be obtained through proper criminal procedures.
An official at the Financial Services Commission said, "With the implementation of the revised rules of duty, investigations into unfair trading in the capital market can start quickly, preventing the destruction of evidence in advance and leading to stringent punishment of violators," adding, "It is expected to help establish fair trading order and restore trust in the capital market."