Window dressing Practices Excluded from Collective Lawsuit

Even though a legislative bill for the collective lawsuit system in the securities industry could pass in the Assembly, one part of the system related with “window dressing” has been delayed for one or two years until its implementation.

“If window dressing practices were left to the courts, no company would be able to survive the lawsuits,” said Lee Han-gu from the Grand National Party on April 21. “We decided to wait a few more years before it can be fully implemented, so that companies can make corrections on their own.”

As the GNP party, which has more seats in the Assembly, decided to go this way, the possibility for the government bill on the collective lawsuit system needs to be re-addressed at the National Assembly.

“The government bill for the collective lawsuit system has already been revealed to the Assembly, so it belongs there,” said a source from the Ministry of Finance and Economy. “The GNP`s decision to delay implementation of legal action against financial integument is not seen as total exemption from the past since it includes lawsuits against past wrongdoings on the part of companies.”

The ruling Democratic Party has yet to release any specific policies on the issue. The GNP`s consideration was made with the realistic assumption that if the collective lawsuit system includes window dressing practices, companies would be caught in a vicious circle of continuing to conceal their illegal efforts in the past.

Instead, the GNP is discussing ways to include other practices such as stock price manipulation, insider trading and trust management activities on a list to be regulated by the collective lawsuit system.

The ruling and opposition parties are planning to implement the system in the second half of the year after legislation of the bill in June.

Kwang-Hyun Kim kkh@donga.com