The Financial Services Commission and the Financial Supervisory Service will tighten their crackdown on front-running on social media (SNS). They said more people are spreading false information and rumors and stoking buying, taking advantage of heightened market volatility amid military tensions from the Middle East.
According to financial authorities on the 22nd, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) will run a focused period for tips on unfair transaction practices based on SNS starting on the 23rd. They plan to launch an immediate investigation upon detecting suspicions, and will pay rewards when evidentiary materials proving the allegations are provided.
The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) said they will especially crack down on front-running by "finfluencers" who use SNS and securities TV programs—buying shares before recommending them and selling when prices rise. They will also block spreading false information that exploits anxious investor sentiment.
Finfluencer is a term combining finance and SNS influencer. Financial authorities have been monitoring the market and conducting investigations, and they have caught finfluencers who used public trust to front-run and those who caused investor losses with related theme stocks.
In one case, a Telegram "reading room" operator, identified as A, said, "I do not recommend stocks I hold," while secretly accumulating shares right before making recommendations to pocket gains, and a securities TV panelist, identified as B, was found to have obtained stock information before the broadcast and bought in advance.
Recommending stocks that were purchased in advance and then selling when prices rise, or spreading false information, constitutes unfair transaction under the Financial Investment Services and Capital Markets Act. Violators can face at least one year in prison or criminal fines of 4 to 6 times the illicit gains.
The Financial Supervisory Service (FSS) said, "If you detect clues of unfair transaction, please report them to the financial authorities immediately," adding, "If you join in buying while knowing that a finfluencer is intentionally pushing up the price, it may constitute price rigging."
Meanwhile, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) said that during the focused tip period, they will pay up to 30% of illicit gains and forfeits as a reward when evidentiary materials proving the allegations are provided. They also decided to pay rewards when participants in the illegal acts come forward with tips.