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Criticisms still fierce over MoJ's incomprehensible decision to disband joint investigation team on stock crimes, amid ever-more rampant financial crimes
By Anna J. Park
Questions still linger about the Ministry of Justice's odd decision in late January this year to abolish the Stock Crime Joint Investigation Team at the Seoul Central District Prosecutors' Office.
The decision was heavily criticized then by financial and legal experts over concerns that the disbandment of the team with special expertise on stock crimes would only bring benefits to those engaged in financial fraud, while failing to enhance protection for consumers against ever-developing malignant stock crimes.
Incomprehensible decision to abolish joint prosecution team
The decision was even more bizarre, considering that the decision was made was when the nation's financial sector was largely criticized for allegedly Ponzi-style fraudulent schemes surrounding Lime Asset Management's investment products, wreaking havoc on investors with hundreds of billions of won worth of damages. The team was also investigating stock price manipulation cases by SillaJen and the Sangsangin Group chief's alleged involvement in illegal private equity fund investments linked to a powerful political figure.
Although the Ministry of Justice explained the rationale behind the disbandment, saying that the government aimed to strengthen checks on the prosecution by reducing its direct investigation departments as part of the ongoing prosecution reform, the decision remained against both laymen's common sense and market experts' views that the need for sophisticated investigation into stock crimes is ever more present for the sake of a healthy capital market.
Voices calling for resurrection of joint investigation on stock crimes
The voice of criticism against the government's hasty decision to abolish the joint investigation team on stock crimes is once again loudly heard now, as Optimus Asset Management has recently halted redemption of several of its funds following allegations of fraudulent schemes.
As the amount of damages, currently standing at about 90.6 billion won ($75 million), are snowballing as the private equity fund operator suspends redemption of more and more of its funds, prosecutors have been raiding related financial firms and Optimus headquarters since Wednesday. Against this backdrop, some argue the need for resurrection of the joint investigation team.
The now defunct-team was first launched back in 2013, spearheading fast-track investigations with close cooperation from the nation's financial authorities ― the Financial Services Commission (FSC), Financial Supervisory Service (FSS), Korea Exchange (KRX), Korea Deposit Insurance Corporation, and National Tax Service among others. The team was often called the "Grim Reapers on Yeouido" for its rigorous yet faster investigative capabilities and stellar achievements.
An industry source said the justice ministry's decision to abolish the team was, in the first place, against the demands of times. The source stressed that retail investors, put in the position of information asymmetry, were most vulnerable to complex and sophisticated financial frauds and stock crimes, and the joint investigation team should've been expanded and strengthened, rather than being abolished.
Another source also said that the abolishment of the joint team only aggravated prosecutors' workloads as well as slowed progress of the investigation, as cases prosecuted by the now-defunct team have been redistributed to two financial investigative teams at the Seoul Southern District Prosecutor's Office.
