Korea FSC Strengthens Efforts to Stamp out Securities Frauds with Organizational Shift

South Korea's Financial Services Commission (FSC) announced that its Capital Market Fraud Investigation Unit was reorganized into two divisions in order to set up a system that facilitates effective investigation of securities frauds.

The FSC established the Capital Market Investigation Unit in September 2013 and has since cooperated with the Prosecutors' Office, the Financial Supervisory Service, the Korea Exchange, and others to counteract such fraudulent activities.

"Despite such concerted endeavors, it remains difficult to effectively act against such unlawful activities only with a single unit, because securities frauds have become more complicated due to a significant expansion in the size of capital markets, the rising number of market participants, and the utilization of social network services," the commission said.

The FSC has worked to launch an organizational reshuffle to reinforce divisions exclusively responsible for investigation into potential frauds in capital markets. As a result, the Capital Market Investigation Unit will be expanded into two divisions: the Capital Market Investigation Coordination Division and the Capital Market Investigation Division.

The newly created Capital Market Investigation Coordination Division will be charged with planning, overall management and coordination in investigating unfair trading activities in capital markets, classification of unfair trading cases, performance of duties assigned to judicial police officers of capital markets, and external relations related to investigation into capital market frauds.

The Capital Market Investigation Division will be responsible for wide-ranging tasks such as investigation and measures regarding unfair trading activities taking place in capital markets, false disclosure, omission of material facts, and others.