South Korean regulators have uncovered a $71 million stock manipulation scheme, marking the first enforcement action under the government’s new crackdown on unfair trading.
The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) said seven people—including business owners, a securities branch manager, and former asset management and private equity executives—colluded for nearly two years to manipulate stock prices. The group reportedly pocketed about $16 million in illicit gains and still holds $71 million worth of shares.
Authorities froze the suspects’ accounts under new rules that allow such action for up to a year, and raided more than 10 locations, including homes and offices, to secure evidence.
Fines could reach twice the amount of the illegal profits, and regulators indicated that additional penalties could include a “one-strike-out” rule, barring offenders from trading securities or serving as executives at listed companies for up to five years.
The crackdown has drawn public support from retail investors in South Korea, while lawmakers are pushing for even harsher measures—potentially fines up to three times illicit profits.
Attention is also on whether authorities will seize not just illegal profits but also the original funds used in the scheme, following remarks from President Lee Jae-myung. Although the legal framework allows it, no such action has yet been taken.
Industry officials praised stronger enforcement but cautioned that regulators must ensure fairness and accuracy in early decisions to maintain market confidence.
