The Financial Supervisory Service (FSS) is found out to have asked the Financial Services Commission (FSC) twice to remit fines of its employees, who engaged in illegal stock trading. It goes beyond supervision and interferes financial companies’ every detail, yet is trying to cover up its own employees’ illegal acts.
The Capital Market Act of Korea compels executives and employees in financial investment businesses, including security firms, to trade stocks in their name and report their stock trading status quarterly. It is because there is a chance that they would inappropriately earn benefits using confidential information. Of course, FSS employees are also applied with this law.
But 50 FSS employees, who traded stocks in someone else’s name or bought unlisted stocks, were caught in the Board Audit Inspection in September 2017. And later in November last year, the FSS requested to remit fines of some of the involved employees as they already received criminal penalty. The Securities and Futures Commission under the FSS withheld the request, which was de facto rejection as FSS employees should be applied with more strict rules to uphold the market order. But the FSS made another request a month later in December to remit fines, which was once again rejected by the commission.
The decision of the Securities and Futures Commission is only natural. The commission even checked whether employees of the FSS or other financial institutions had received amnesty in similar situations. Over the three years from 2013 to 2015, the FSS charged 3.4 billion won to 161 employees in 31 financial firms for violating the Capital Market Act. Its hypocrisy goes beyond illegal stock trading. Ironically, executives and staff of the state financial agency, who are supposed to supervise and uncover illegal employment of financial companies, often face criminal penalties by getting caught while engaging in illegal hiring.
Meanwhile, a discussion to give the FSS judicial police power is in progress. It gives the FSS the power to arrest, detain, confiscate or monitor communications on financial crimes, such as illegal stock trading or stock price manipulation. There certainly is a necessity to authorize experts to prosecute financial crimes that are becoming ever more meticulous and intelligent. But not many citizens would think the FSS that scrambles to cover up illegal activities of its employees has the integrity or ability to have such authority.