As volatility in Korea's stock market widens, the Financial Supervisory Service convened chief internal auditors of major securities firms and called for stronger investor protection and internal controls. It also warned that it would respond sternly to acts that disrupt market order, particularly cautioning against the potential overheating of marketing related to overseas investments in recent days.
The Financial Supervisory Service said that on the 11th it held a meeting at its Yeouido headquarters in Seoul with chief internal auditors of major securities firms to review the status of internal controls and risk management amid increased volatility in the stock and foreign exchange markets.
Seo Jae-wan, assistant deputy governor for accounting at the Financial Supervisory Service, said, "The greater the volatility in the stock and foreign exchange markets, the more important investors' trust in the resilience of our capital market becomes," and added, "We will take a stern response to irresponsible sales practices, such as emphasizing only investment returns and advertising or soliciting high-risk, herding investments in certain areas, and we will root them out."
In particular, it asked for utmost care in investor protection during business processes so that retail investors are not exposed to excessive currency risk, noting concerns that marketing competition may overheat in the course of brokering and advertising overseas investments aimed at individual investors in recent days.
It also instructed audit departments to proactively inspect and manage business segments where internal controls could loosen amid heightened market volatility. It asked them to faithfully perform their internal control role to prevent the stimulation of excessive investor expectations for short-term profit or the occurrence of unsound sales practices.
Chief internal auditors from securities firms who attended the meeting expressed their resolve to faithfully serve as "internal control sentinels" that do not wobble with market volatility. They also said they would expand their in-house audit and inspection functions to prevent the occurrence of unsound sales practices that could cause investor harm.