FSS may get investigation powersIn late 2010, shares of CNK International, a resource development firm, started to skyrocket, which the Korea Exchange and the Financial Supervisory Service found weird. They continued monitoring the stock, and found that from June to August 2011, as the stock peaked, its chairman sold his shares.
For four months, a joint investigation by the Korea Exchange and the FSS gathered evidence of stock manipulation. It notified the Securities & Futures Commission of its findings in January 2012. The commission convened a meeting and decided to go to prosecutors with a case against CNK’s chairman. That process took two weeks.
It was too late. CNK was ramping up its stock by making inflated claims about diamonds it had found in a mine in Cameroon. But by the time prosecutors stepped in to what were obviously shady dealings, its chairman had already left the country for Cameroon. Because more than a year had passed since the shady practices, a lot of evidence had been destroyed. Based on current law, tracing telecommunications records is only allowed for one year and e-mails that have been deleted cannot be restored. The prosecution could only charge five company officials.
To speed things up, the government is considering giving FSS officials the rights to launch their own investigations into financial crimes.
Sources confirmed Wednesday that the Blue House, the Ministry of Justice, the Financial Services Commission, the FSS and the Korea Exchange held a meeting recently and discussed such measures. The move relates to President Park Geun-hye’s request at her first cabinet meeting earlier this month that stock manipulators be cracked down upon.
If FSS officials are given special investigation rights, they will be able to conduct raids and stop suspects from leaving the country.
On Wednesday, FSS Governor Choi Soo-hyun told reporters he is aware of criticism that it takes too long for the FSS to investigate illegal financial practices. “We will make sure that the whole inspection process does not take more than 150 days,” he said.
By Lee Ga-young, Lee Eun-joo [email@example.com]