Financial Supervisory Service Governor Lee Chan-jin marked the first anniversary of taking office. Lee cracked down on unfair trading that undermines order in the financial markets and focused on disclosure oversight to strengthen shareholder rights. In the second year of the term, the plan is to maintain the current stance while accelerating a shift to productive finance.
The Financial Supervisory Service (FSS) on the 14th announced key achievements over the past year and future tasks to mark Lee's first year in office. Since taking office, Lee has sought to eradicate market-disrupting acts, reviewed accounting fraud to improve the soundness of the capital market, and strengthened the disclosure supervision and management system to protect investors.
The biggest change in the capital market is stronger investigations into unfair trading. The Financial Supervisory Service (FSS) launched a "joint response team to eradicate stock price manipulation" to focus on major cases, and uncovered cases such as long-term price rigging by the super rich and the use of undisclosed information on tender offers by senior executives at securities firms, filing complaints with prosecutors.
In April this year, the Financial Supervisory Service (FSS) introduced investigative initiation authority to its special judicial police for the capital market, enabling compulsory investigations into serious unfair trading cases. Accordingly, it shifted cases involving the use of undisclosed information and front-running to initiated investigations and, in July, conducted search and seizure, pursuing a response that links examinations and investigations.
In its second year, the Financial Supervisory Service (FSS) plans to continue a linked response between examinations and investigations, swiftly shifting urgent and serious unfair trading cases to probes by the special judicial police. The agency intends to root out stock price manipulation by clawing back illicit gains from perpetrators and expelling them from the market.
It also focused on enhancing the soundness of the capital market by strengthening accounting supervision. From Aug. last year to Jul. this year, it conducted reviews and inspections of a total of 148 companies, imposing sanctions on 62 of them. Notably, it levied a 20.5 billion won penalty surcharge on Young Poong for understating the provision for environmental remediation, and an 8.4 billion won penalty surcharge on Korea Zinc for understating impairment losses on investment assets and goodwill.
It also strengthened the disclosure supervision system to protect investors. In Jul., it prepared a comprehensive improvement plan to enhance the readability of disclosure information in the pharmaceutical and bio industry and block exaggerated or false publicity. At the same time, it tightened the review of securities registration statements with high concerns about conflicts of interest among shareholders, including large paid-in capital increases such as at Hanwha Solutions and mergers of affiliates such as E-MART and Shinsegae Food.
It also examined the fiduciary duty of asset managers entrusted with shareholders' rights. It reviewed asset managers' proxy voting records and shareholder rights exercise systems, providing guidance on exemplary and deficient cases. As a result, since 2024, both the proxy voting participation rate and dissent rate have improved each year, and the number of public fund managers with internal controls in place—such as establishing dedicated teams for proxy voting—has increased.
Lastly, it focused on a shift to productive finance. In Jul., the Financial Supervisory Service (FSS) partnered with Naver Pay to build a "venture capital investment platform" to ease information asymmetry in the venture capital market. It also supported the smooth launch of the public participation-type Public Growth Fund, raising 720 billion won and guiding investment into advanced strategic industries.
Going forward, the Financial Supervisory Service (FSS) plans to support the review of additional licensing for comprehensive investment firms to issue short-term notes and the launch of a second public participation-type Public Growth Fund. Along with this, it will pursue reasonable deregulation and system improvements, including expanding the scope of assets recognized as venture capital and overhauling the prudential regulatory framework for comprehensive investment firms.