As market volatility widened, illegal investment content targeting individual investors spread, prompting the financial authorities to begin a full-fledged crackdown on finfluencers. Cases have been uncovered in which fees were charged for subscriptions while offering stock picks and timing for trades without filing or registering, calling for investor caution.
The Financial Supervisory Service said on the 12th that it found potentially illegal activities across five channels after activating a "monitoring task force" to inspect finfluencers' illegal financial activities. A finfluencer is an influencer who provides information on stocks or virtual assets in the form of content and influences investment decisions.
Of the detected cases, four involved "similar investment advisory business" models that provided paid investment information without filing. YouTubers A, B and C, without separate filings, charged subscription fees ranging from 2,990 won per month to as high as 600,000 won while recommending domestic stock picks such as construction and energy or providing technical analysis. Another channel indicated trading timing for U.S. leveraged ETFs based on the flow of WTI crude prices and received fees.
Some went a step further and engaged in activities that could constitute discretionary investment management. YouTuber E, without registering for discretionary investment management, created and sold an automated stock-trading program and was found to have effectively made investment decisions on behalf of clients.
Such conduct is problematic because it goes beyond merely providing content and can in effect constitute financial investment business. Under the Financial Investment Services and Capital Markets Act, similar investment advisory businesses must file in advance, and discretionary investment management that manages investors' funds or trades on their behalf must register with the financial authorities. Violations may be subject to criminal penalties.
The Financial Supervisory Service plans to take all possible measures, including referring cases for investigation and conducting inspections, to root out finfluencers' illegal financial activities. In particular, if unfair transaction activities such as front-running or spreading false information are confirmed, it will carry out intensive investigations through the Capital Market Investigation Department and the special judicial police. If necessary, it will also seek cooperation with overseas financial authorities.
An official at the Financial Supervisory Service said, "Although it takes the form of content, cases that actually amount to investment advisory or asset management are increasing," and added, "Providing investment information for money while unfiled and unregistered clearly raises the possibility of illegality."
The financial authorities also urged investors to exercise particular caution. Blindly following the stocks recommended by finfluencers can lead to heavy losses, and when using paid investment information services, investors must check filing and registration status through the Financial Supervisory Service's Fine system, it emphasized. It also asked that suspected unfair transactions or illegal financial investment businesses be reported immediately.