The Korea Exchange is currently facing a significant challenge as the Market Monitoring Committee recently uncovered 98 suspected cases of market manipulation. This revelation comes amidst a backdrop of negative factors affecting the domestic capital market, including the Trump trade and emergency martial law, leading to a subdued atmosphere in the lobby of the Korea Exchange in Yeouido.

The committee’s investigation revealed a variety of illicit practices, with the most common being the use of undisclosed information in 59 cases. Notably, 12 cases involved the exploitation of favorable information related to open purchases. Additionally, undisclosed information pertaining to changes in the largest shareholder, financing activities, and new drug developments were also manipulated for personal gain.

While there was a decline in cases of market price manipulation compared to the previous year, the committee identified instances of repeated market price manipulation by certain groups. These entities artificially inflated market prices to sell convertible bonds (CB) and pre-purchased stocks at inflated values. Furthermore, fraudulent transactions were observed in 18 cases, primarily involving false disclosures for large-scale financing and deceptive practices related to non-capital mergers and acquisitions.

The sophistication of fraudulent transaction methods is a growing concern, with practices such as entering contracts with ambiguous foreign entities and issuing private equity CBs without a viable payment mechanism becoming more prevalent. An official from the Korea Exchange’s Market Monitoring Committee highlighted the increasing complexity and intelligence behind unfair trading practices. Investors were advised to exercise caution, particularly when dealing with theme stocks disconnected from intrinsic value, stocks undergoing frequent changes in major shareholders, large-scale financing stocks, and unverified online information.

The committee’s efforts to uncover and address these instances of market manipulation underscore the importance of maintaining integrity and transparency in financial markets. As regulatory bodies continue to enhance surveillance and enforcement measures, market participants are urged to adhere to ethical conduct to uphold the credibility and fairness of the Korea Exchange.