By Na Jeong-ju
The prosecution will conduct “fast-track” investigations into urgent cases of stock price manipulation without preliminary audits by financial regulators and stock market watchdogs to ensure quick punishment of those involved.
It will also create a joint team with the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) to monitor securities transactions. FSC and FSS officials who join the team will be given the status of “special investigators” so that they can trace accounts belonging to suspects and secure evidence.
These plans were included in a package of measures announced Thursday to counter share price rigging.
Manipulators will face heavier punishment. Currently, courts can hand down a jail term of up to 10 years or impose a fine of up to three times the amount of illegal gains. However, they will now face a jail term and a fine.
The maximum financial reward for those providing tip-offs will also be hiked to 2 billion won ($1.79 million) from 300 million won, officials said.
“These crimes have become more sophisticated and hard to detect. We need to conduct a full-scale reform of the current systems regarding monitoring, investigation and punishment,” FSC Vice Chairman Jeong Chan-woo told reporters. “That’s necessary to protect innocent investors and restore trust in the stock market.”
By September, the Korea Exchange will set up a new monitoring system for Internet-based stock transactions made through personal computers, mobile phones, tablet PCs and other electronic gadgets.
The measures come after President Park Geun-hye instructed the Cabinet to deal sternly with stock price rigging in early March, saying manipulators are “driving ordinary investors into despair and raking in enormous undue profits.”
There have been widespread concerns that it takes too long for stock manipulation cases to be taken to court after being first detected.
Under the current system, the FSS and the Korea Exchange should refer suspected cases to the prosecution after conducting their own examinations. The prosecution then checks the cases and brings charges against violators.
Civic groups and criminal experts have complained that this process usually takes up to one year, enabling criminals to destroy evidence or flee to other countries.
Finance officials believe the proposed fast-track investigative system and giving special investigative rights to FSC and FSS officials will address this problem.
“The government will submit revision bills to the National Assembly as quickly as possible so that the measures can take effect within this year,” an FSC official said.
The FSS, which is supervised by the FSC, is called the “financial prosecution” but doesn’t have the right to indict criminals. Nor can it look into records of financial transactions by suspects or confiscate them.