FSS to Conduct "On-Site Education to Prevent Unfair Trading" for 20 Listed Companies

The Financial Supervisory Service (FSS) said on November 9 that it will conduct its “On-Site Education to Prevent Unfair Trading” program in November for about 1,000 employees at 20 domestic listed companies.

The FSS has held this preventive education program annually, judging that employees of listed companies, who have greater access to inside information than general market participants, may violate unfair trading regulations because of insufficient understanding of the relevant rules or carelessness.

This year, the FSS expanded the program to more companies than last year’s 15 to provide more companies with the opportunity to participate. The program will cover seven KOSPI-listed companies and 13 KOSDAQ-listed companies, including two financial firms (securities companies) that had not previously been included. By region, the companies are located in Seoul (6), the capital region (11), and other regions (3).

The FSS plans to provide training on topics of particular interest to employees, including the use of material nonpublic information and the rules on returning short-swing profits, alongside major cases of violations and regulatory actions. It also aims to raise listed-company employees’ awareness of compliance by explaining the framework for regulating unfair trading under the Capital Markets Act and recently strengthened sanctions. In addition to criminal penalties, sanctions for detected cases of unfair trading may include fines, suspension of payments from accounts used in the misconduct, restrictions on trading financial investment products, and restrictions on appointments to executive positions at listed companies.

For example, an employee identified as B, who was responsible for disclosures at listed Company A, learned material nonpublic information about positive developments in new drug development through their work. Shortly before the related disclosure, B purchased shares through an account in the name of an acquaintance, C. After the stock price rose following the release of the information, B sold the shares and made an illicit profit. This case constitutes suspected violations of Article 174 of the Capital Markets Act, which prohibits the use of material nonpublic information, and Article 173, which requires the reporting of share ownership.

An FSS official said, “Because the program selects major cases that are of particular interest to employees and provides tailored training, we expect it to have a significant preventive effect and achieve high levels of participant satisfaction.” The official added, “We plan to help employees of listed companies fully understand the relevant laws and regulations and major cases of violations, and comply with the applicable rules through this training.”

This content was produced with the assistance of AI translation services.