The South Korean government is set to launch a joint task force by the end of this month to combat stock price manipulation and other unfair trading practices in the domestic capital market. The move comes in response to growing concerns over illegal trading and is part of the government’s broader effort to restore investor confidence and enhance market integrity.
The task force, led by the Financial Supervisory Service (FSS) in cooperation with the Financial Services Commission (FSC) and the Korea Exchange (KRX), will operate as a unified body to oversee detection, investigation, and enforcement of capital market violations. It marks a significant shift from the previous fragmented structure, where preliminary monitoring was conducted by the KRX, investigations by the FSS, and sanctions issued by the FSC.
Initially composed of around 34 investigators, the task force will eventually expand to 50 personnel. These professionals will include experts from each of the participating institutions, working collaboratively under a centralized system. The task force will begin as a pilot project for one year, during which the government will evaluate its performance and consider whether to institutionalize it as a permanent organization.
President Lee Jae-myung previously underscored the government’s firm stance on capital market crimes, warning that those who engage in stock manipulation “will face financial ruin.” The task force aims to translate that warning into action by implementing a “one-strike-out” policy, under which violators could face immediate sanctions. This includes the preemptive suspension of trading accounts under investigation, fines up to twice the amount of illicit profits, and public disclosure of the names of controlling shareholders and executives involved in misconduct.
To improve efficiency and reduce investigation time, the surveillance system will transition from an account-based model to an identity-based model using anonymized personal identifiers. The Financial Supervisory Service expects this reform to improve detection rates of abnormal trading behavior by nearly 40 percent. In addition, artificial intelligence will be deployed to enhance surveillance capabilities and keep pace with increasingly sophisticated trading abuses.
Currently, stock manipulation cases in Korea can take 15 to 24 months to resolve. The new system is expected to shorten that timeline to as little as six or seven months, enabling quicker investor protection and stronger market discipline. The task force also plans to tighten oversight of listed companies, including faster delisting procedures for firms with repeated audit failures or serious governance issues.
A spokesperson from the FSC stated that the launch of the joint task force reflects the government’s commitment to safeguarding investors and upholding fairness in the market. “We will continue to strengthen our response to market manipulation and ensure a transparent and trustworthy environment for all market participants,” the official said.
