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Enforcing the market abuse regime in Korea: recent developments and challenges ahead
Capital Markets Law Journal  (IF),  Pub Date : 2021-09-02, DOI: 10.1093/cmlj/kmab029
Min-woo Kang

Key points
  • Aimed at fighting against securities fraud, a new amendment rule for the enforcement of market abuse regulation has recently been filed by the Korean lawmakers. The gist of the bill is to enable regulators to impose civil or administrative penalties on a party involved in fraudulent behaviours (eg insider dealing, market manipulation, unfair trading) as a more effective means of sanction, which is not available under the current regulatory system. Good progress is anticipated, when the bill get through legislature. However, the features of this proposal are unclear and limited in some critical aspects.
  • This article explores the current market abuse regime (MAR) in Korea and examines the issues a new draft bill raises: an administrative sanction is still subordinated to criminal sanctions. Despite its many advantages, the regulator cannot independently exercise sanctions authority in market abuse cases. Unjust enrichment is used as a penalty base.
  • It is thus argued that the existing punitive paradigm based on criminal sanctions should be shifted towards administrative sanctions, whilst ensuring due process in administrative proceedings to a substantive level. Further, we call for law and policy-makers to divorce the legally binding ties of penalties from ill-gotten profits.