FSS uncovers unregistered brokers and consultants

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FSS uncovers unregistered brokers and consultants

Korean authorities discovered 167 unregistered individuals or companies offering investment advice or brokerage services online, the top financial watchdog said Thursday.

They attracted customers by offering investments that were supposed to deliver high yields, or profits, and required smaller deposits than usual.

Of the 167 entities, 159 posted ads on their own blogs or websites saying people could trade in Kospi 200 futures with only a minimum margin requirement of around 500,000 won ($457).

Under current law, trading in Kospi 200 futures requires a margin requirement of at least 30 million won.

Some of the companies said customers could use their accounts for futures trading - an attractive proposal since opening a futures trading account is costly - and even promised they would compensate for any losses.

Under the law, anyone who runs an unauthorized entity offering brokerage service for trading could be jailed for up to five years or fined a maximum of 200 million won.

Three of the illegal companies offered various financial products on Internet bulletin boards or blogs by saying, “We guarantee you a high-yield investment.”

One unauthorized company contacted potential customers through online chats and text messages, saying they would offer one-on-one consulting services for investing.

Unregistered investment advisers can be jailed up to three years or fined a maximum of 100 million won, according to the Financial Supervisory Service (FSS).

Four entities collected membership fees from people on online communities in return for giving them trading techniques or information on trading timing, which could led to 10 million won in fines.

The financial watchdog advised small investors to check whether a brokerage service or consultant is approved by the government. Entities that are not approved are likely to be thieves, it said.

BY KIM HEE-JIN [kim.heejin@joongang.co.kr]
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