On July 9, 2025, the South Korean financial authorities declared war on unfair trading in the capital market, announcing ultra-high-intensity countermeasures. To instill the perception that stock market manipulation leads to 'ruin,' a 'Joint Investigation Team' comprising the Financial Services Commission (FSC), the Financial Supervisory Service (FSS), and the Korea Exchange (KRX) will be launched by the end of this month, and stock manipulators are expected to be immediately expelled from the market.

President Lee Jae-myung emphasized on June 11 at an on-site meeting at the Korea Exchange, "We must increase the probability of detecting stock manipulation, and market surveillance operations using AI technology are also necessary." In line with this, Lee Yoon-soo, Standing Commissioner of the Securities and Futures Commission, stated at a joint briefing held at the Korea Exchange on the 9th, "We will establish a fair and transparent market order to achieve 'one-strike out' for unfair trading." He declared a strong will for enhanced initial response and strict penalties, saying, "It's difficult to restore market trust without correcting the distorted perception that 'the profits from unfair trading are greater than the minor penalties.'"

Eradicating Unfair Trading: Key Strategies and Detailed Measures 

Financial authorities and related organizations plan to implement detailed measures in the following four directions to eradicate unfair trading in the capital market.

Strengthening Unfair Trading Investigation Capabilities: 

Launch of Joint Investigation Team: The most noticeable change is the launch of the joint investigation team to eradicate stock manipulation by the end of this month. There have been many criticisms that the previously fragmented handling of deliberation, investigation, and sanction stages across different institutions led to delays in responding to urgent and important cases. Now, personnel from the FSC, FSS, and KRX will gather in one place at the Market Surveillance Committee. This joint investigation team will jointly investigate urgent and major cases from the initial stage, utilizing all the powers and systems of each institution. This is expected to significantly reduce the investigation period from the existing 1.5-2 years to 6-7 months.
Shift in Market Surveillance System: The Korea Exchange's market surveillance system will shift from an 'account-based' to a 'individual-based' system. Previously, if an individual opened accounts at multiple securities firms, they could be perceived as different entities and escape the detection network. In the future, surveillance will focus on individuals, correcting this loophole. This will effectively reduce the number of surveillance analysis targets by approximately 40%, increasing market surveillance efficiency.
 
Enhancing Unfair Trading Detection Capabilities with AI: 

Advanced AI-based Market Surveillance System: The market surveillance system will be advanced by applying artificial intelligence (AI) technology. AI will analyze past deliberation results from the Market Surveillance Committee to improve indicators for judging the suspiciousness of unfair trading activities. This will lay the groundwork for quick and precise responses to increasingly sophisticated and complex unfair trading techniques. This is a concrete implementation of the AI utilization emphasized by President Lee Jae-myung.
 
 'One-Strike Out' for Offenders through Proactive Administrative Sanctions: 

Freezing and Recovery of Ill-Gotten Gains: Accounts suspected of being used for illegal activities and still containing profits will undergo a proactive 'payment suspension' procedure at the investigation stage to freeze the suspect's gains and minimize market damage. Furthermore, the system allowing the imposition of fines up to twice the ill-gotten gains on suspects will be actively utilized to thoroughly recover criminal proceeds.
Disclosure of Offender Information and Market Expulsion: Major shareholders and executives involved in significant unfair trading activities will have their illegal acts and personal details actively publicized to warn investors and prevent similar damages. In addition, restrictions on financial investment product trading and limitations on appointing executives of listed companies will be actively utilized to definitively expel stock manipulators from the market.
Strict Punishment for Short Selling and Disclosure Violations: Serious short-selling violations linked to unfair trading will be strictly punished with the highest level of institutional sanctions, including a fine of 100% of the short-selling order amount and business suspension, as well as restrictions on financial investment product trading. Strict action will also be taken against disclosure duty violations, such as violations of the 5% rule.

Prompt Expulsion of Troubled Listed Companies: 

Strengthening Listing Maintenance Requirements and Streamlining Expulsion Procedures: As President Lee Jae-myung pointed out that troubled companies hinder the growth of the stock market, and considering the risk of such companies being exploited for unfair trading, they will be promptly expelled. Listing maintenance requirements, such as market capitalization and sales, will be gradually strengthened to meet global standards. The delisting review process will also be streamlined from a three-instance system to a two-instance system to ensure that troubled listed companies are promptly removed from the market.
 
Lee Yoon-soo, Standing Commissioner of the Securities and Futures Commission, reiterated, "A month ago, the President emphasized that establishing a fair capital market order through the eradication of unfair trading is the starting point for KOSPI 5000 points." He stressed that immediately implementable measures, such as strengthening inter-agency cooperation and prompt expulsion of troubled listed companies, will be swiftly executed, and necessary institutional improvements will also be pushed forward at an accelerated pace. The government's strong determination is expected to be a significant turning point in restoring investor confidence and making the South Korean capital market more transparent and healthy.