Korean Banking Law Crackdown: Insider Trading, Market Manipulation, and Tax Fraud
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Seoul, Korea - In an effort to curb financial irregularities, Korean authorities have tightened banking laws to prevent insider trading, market manipulation, and tax fraud. The Financial Investment Services and Capital Markets Act (FISCMA) has been amended to include stricter regulations on these offenses.
Insider Trading: A Major Concern
The FISCMA prohibits the use of material non-public information by specified insiders, including:
- Major shareholders
- Officers
- Employees
- Tender offerors
- Prospective acquirers or sellers of subject securities
- Their executives and shareholders
Violators may face imprisonment ranging from one year to a life sentence, depending on the amount of profits or avoided losses.
Market Manipulation: A Growing Concern
The FISCMA prohibits market manipulation through means such as:
- Wash-trades
- Price collusion
- Creating false impressions
- Spreading false rumors
- Making false representations
- Engaging in price stabilization
Both intent and purpose must be proven to establish market manipulation. Convicted perpetrators may face similar penalties to those for insider trading.
Unfair Trading: A Broad Definition
The FISCMA also restricts “unfair trading” in relation to non-listed securities, such as:
- Private placement
Unfair trading is defined as using unfair means, schemes, or trickery; making false representations or omissions of material facts; or using inaccurate market prices to attract demand for trading.
Tax Fraud: A Major Concern
Korean tax laws provide for the criminal punishment of intentional tax offenses, including:
- Tax evasion
- Failure to issue a tax invoice or issuing a fraudulent one
- Title lending
- Failure to comply with an order to pay accrued taxes
Tax evasion is the most common offense, punishable by imprisonment and/or a fine up to double or quintuple the amount of unpaid taxes.
The Importance of Compliance
These regulations demonstrate the importance of compliance in the financial sector. Individuals and companies found guilty of these offenses may face severe penalties, including:
- Imprisonment
- Fines
It is essential for market participants to understand these regulations and adhere to them to maintain a healthy and trustworthy financial system.
Conclusion
The Korean government’s efforts to strengthen banking laws aim to prevent financial irregularities and maintain public trust in the financial sector. As the financial landscape continues to evolve, it is crucial for regulators and market participants to stay informed about changing regulations and comply with them to ensure a stable and prosperous financial environment.