To root out stock manipulation and unfair trading practices that have long plagued the Korean stock market, the Financial Services Commission (FSC), Financial Supervisory Service (FSS), and Korea Exchange will launch a joint task force by the end of this month. Authorities also plan to enforce a “one-strike-out” policy strictly, expelling companies found guilty of market manipulation from the stock exchange. This action follows President Lee Jae-myung’s recent warning that anyone “playing games in Korea’s stock market will be ruined.”
Unfair trading has been a significant factor behind the persistent “Korea discount,” the undervaluation of Korean stocks. Despite frequent stock manipulation scandals that shake investor confidence, enforcement has remained slow, and penalties have been weak. It often takes two to three years from detection to sentencing, and punishments have typically been too lenient relative to the damage caused. To address this, authorities introduced more substantial penalties in April, including fines of up to twice the amount of illegal gains, asset freezes on suspicious accounts, and bans on trading and executive appointments. It is crucial to show that these measures are more than empty threats.
Financial authorities have emphasized their commitment to strictly enforce a zero-tolerance policy, pledging to impose severe penalties even for a single instance of unfair trading, illegal short selling, or false disclosures. Because stock market crimes can lead to astronomical losses for investors if detection and response are delayed, early and coordinated action among regulatory bodies is essential.
In this context, the market is closely watching whether regulators will refer HYBE Chairman Bang Si-hyuk to prosecutors. He is under suspicion of misleading investors by denying any plans for an initial public offering (IPO), then later listing the company and pocketing profits estimated at 200 billion won.
As the structure and mechanisms of the capital market become too complex for ordinary investors to fully understand, related crimes have grown more sophisticated and deceptive. The rapid global movement toward the institutionalization of cryptocurrencies and stablecoins also increases the likelihood of new forms of capital market crime. It has become urgent to strengthen regulatory oversight and enforcement capabilities to a level that exceeds that of those committing stock manipulation. As long as manipulation remains difficult to detect and punishments remain light, the perception that “crime still pays” will persist, and the goal of reaching KOSPI 5000 will remain out of reach.