Cases of unfair trading under the Financial Investment Services and Capital Markets Act, such as market manipulation, the use of undisclosed material information (i.e., insider trading), and fraudulent transactions, as well as violations of disclosure obligations, such as failing to submit a securities registration statement, may result in administrative sanctions and criminal penalties. Therefore, investors and companies operating in the capital markets must carefully assess their legal risks.

In Korea, investigations into unfair trading practices are conducted through a coordinated framework involving the Financial Services Commission (FSC), the Financial Supervisory Service (FSS), and the Korea Exchange (KRX). Typically, these investigations begin with market surveillance activities by the KRX and the FSS, followed by a KRX review process and then formal investigations by the FSC and the FSS. Upon completion of the investigation—including interviews of relevant individuals—administrative sanctions may be determined by the Capital Market Investigation Review Committee and the Securities and Futures Commission. The case may thereafter be referred to investigative authorities, potentially leading to criminal proceedings. Therefore, failure to provide timely and effective responses at each stage carries a high risk of resulting in sanctions that are disproportionate to the nature of the alleged violation. Furthermore, once a matter progresses to the criminal stage, it can entail significant time, cost, and exposure. Proactive and strategic engagement throughout the investigation and sanction phases is therefore critical.

At Shin & Kim, our group of lawyers, advisors, and experts includes professionals with firsthand experience conducting investigations into unfair trading and disclosure violations at the FSS and KRX. Leveraging this experience, we manage the full lifecycle of a response—from initial investigation strategy and document submissions to witness interviews and post-investigation sanction proceedings—providing comprehensive, timely, and practical advice. In addition, we work in close coordination with our Criminal Defense Practice Group from the outset, ensuring a consistent and seamless strategy should the matter escalate to criminal prosecution, thereby maximizing the prospects of a favorable outcome.

Moreover, Shin & Kim draws on its extensive network of senior advisors, many of whom formerly held high-ranking positions at the FSC and FSS. Through this network, we facilitate effective and appropriate communication with regulatory authorities, enabling issues to be addressed efficiently and in full compliance with applicable laws and regulations.