Responses to unfair trading in the capital market, financial supervision bureau accelerates investigation speed

The Capital Market Special Judicial Police of the Financial Supervisory Authority can transfer investigation cases more quickly, making the response system to unfair trading in the capital market even faster.

The Financial Committee announced that on April 15, 2026, the revised “Rules for the Duty of the Capital Market Special Judicial Police” were approved by vote and took effect immediately. The core of this revision is that, for cases currently under investigation by the Financial Committee and the Financial Supervisory Authority, if the suspect’s criminal conduct is significant and there is a risk of evidence being destroyed or the need for rapid response, then even without going through the prosecutor’s reporting or notification procedures, the case can be converted into an investigation through the Investigation Review Committee.

Previously, even if signs of illegality were found during the investigation phase by the Financial Supervisory Authority, actual initiation of an investigation still required a separate process, which was time-consuming. During this process, concerns had been raised that relevant materials might disappear or that tracing the flow of funds could become difficult. Especially for capital market crimes such as stock price manipulation, insider trading, and market manipulation, where transactions are rapid and traces are often dispersed electronically, the speed of initial response often largely determines the success or failure of the investigation. This revision is interpreted as a measure aimed at bridging this gap by shortening the interval between investigation and inquiry.

At the same time, adjustments were also made to the Investigation Review Committee system that deliberates whether to convert a case into an investigation. The composition of the committee was changed to include the head of the Financial Supervisory Authority’s investigation department and legal advisors. On the other hand, considering the confidentiality of investigations and inquiries, civilian members affiliated with the Capital Market Investigation Review Committee were excluded. Additionally, it was clarified that if more than two members request or agree to a review, or if the chairperson deems it necessary, the committee can be convened to submit a proposal. This aims to reduce delays caused by procedural ambiguities and to improve the system so that decisions can be made swiftly on-site.

However, with the implementation of this system, concerns have also arisen. Some argue that the Financial Supervisory Authority is not an administrative agency but a supervisory body with a semi-private nature, and if it can directly connect with investigative functions during the investigation phase, its authority might be excessively expanded. There is also debate over whether sufficient checks and balances exist to prevent abuse of investigative powers. The Financial Committee believes that the procedures of the Investigation Review Committee itself can serve as a control mechanism, and plans to develop specific operational guidelines, including case selection criteria and judgment principles, to ensure the system’s stable implementation. This trend is likely to develop toward increasing the speed and force of responses to capital market crimes, but at the same time, whether transparent standards for the exercise of authority and effective post-implementation oversight mechanisms can be established will determine the credibility of this system.