CONTENTS
- 1. Violation of the Financial Investment Services and Capital Markets Act, What Were the Detailed Circumstances?
- - Violation of the Financial Investment Services and Capital Markets Act, What Are the Relevant Statutes?
- 2. Violation of the Financial Investment Services and Capital Markets Act, What Was the Court’s Determination?
- 3. Violation of the Financial Investment Services and Capital Markets Act, What Is Daeryun’s Strategy?
1. Violation of the Financial Investment Services and Capital Markets Act, What Were the Detailed Circumstances?
The offense committed by A and B, who were brought to trial for violating the Financial Investment Services and Capital Markets Act, was a “stock chat-room fraud.”
After leaving the companies where they had worked, the two were looking for jobs when they found a job posting for “IPO sales” on a website. The posting was for work that involved setting up a stock chat room and acting as a shill.
Receiving scripts and instructions through the Telegram messenger from a ringleader whose identity was unknown, they called large numbers of unspecified people and induced them to join the stock chat room.
They then planned to deceive victims into believing that IPO shares were being sold, hand 40 percent of the amounts received in the name of payment for the IPO shares to the ringleader, and split the remaining 60 percent among themselves.
After renting an office and purchasing a file listing the names and mobile phone numbers of thousands of people, they called large numbers of unspecified people, promoted the chat room with the message that they would “provide stock information free of charge for one month,” and enrolled about 100 people in the stock chat room.
They then posed as senior researchers at a well-known broadcasting company and posted stock-related information they had received via Telegram in the stock chat room. In addition, each of them used five to ten IDs to operate within the stock chat room and posted account-statement files for verifying profits that they had received from the ringleader.
After that, following the ringleader’s instructions, they posted messages to the effect that “if you invest now in OO shares scheduled to be listed in Month XX, 20XX, you can earn a tenfold return; we will sell the shares we hold at a low price, so anyone who wants to buy should apply,” and at the same time used other IDs to act as if they too would purchase the IPO shares, playing the role of “shills.”
Using this method, over a period of about two months they received remittances totaling approximately 360 million won from four victims on a total of 18 occasions, and they came to be charged with violating the Financial Investment Services and Capital Markets Act.
Violation of the Financial Investment Services and Capital Markets Act, What Are the Relevant Statutes?
🔗A stock chat room is a room that provides investment information for investors on social media. When this is abused to provide false information to novice investors who lack much knowledge of stocks and thereby defraud them of money, it constitutes an illegal stock chat room.
Common examples include exaggerating rates of return or verifying false performance records, as well as methods of impersonating well-known figures to reassure investors, which clearly amount to a violation of the Financial Investment Services and Capital Markets Act.
Did you know that operating such a stock chat room requires a 🔗conversion to an investment advisory business as a prerequisite?
Under the amended Financial Investment Services and Capital Markets Act, unsound business practices by quasi-investment-advisory operators, such as operating illegal chat rooms, are prohibited.
A quasi-investment-advisory operator is permitted to conduct only the business of providing non-individualized advice to unspecified large numbers of people through a one-way channel. A one-way channel here refers to a chat room in which recipients cannot enter chat messages, push messages, notification messages, and the like.
A business model that operates on a paid membership basis through online two-way channels, such as social network services (SNS) and open chat rooms, is available only to professional investment advisory operators.
A violation may be punishable by imprisonment for up to three years or a fine of up to 100 million won.
2. Violation of the Financial Investment Services and Capital Markets Act, What Was the Court’s Determination?
For A and B, who were brought to trial for violating the Financial Investment Services and Capital Markets Act, the court sentenced them to four years and six months’ imprisonment and four years’ imprisonment, respectively.
The court stated its reasons for sentencing, noting that “the defendants, in conspiracy with the ringleader whose identity is unknown, deceived the victims and defrauded them of a large sum in the name of payment for unlisted shares, so their culpability is not light, and in light of the planned nature of the offense, the nature of the crime is also not good.”
3. Violation of the Financial Investment Services and Capital Markets Act, What Is Daeryun’s Strategy?
We have analyzed the District Court judgment that imposed an actual custodial sentence on the group that committed stock chat-room fraud in violation of the Financial Investment Services and Capital Markets Act.
As in the case above, the act of demanding investment through false and exaggerated advertising while presenting high rates of return as a precondition is a representative form of stock fraud. Accordingly, before investing in stocks, you should gather sufficient information and confirm whether the sources of that information are reliable.
If you have suffered a large loss through stock chat-room fraud, responding promptly can increase the likelihood of recovering the amount of the loss.
In addition, if you wish to proceed with a criminal complaint by applying the relevant charges, you must clearly present evidence that they spread false information, and it may be advantageous to obtain the assistance of an attorney experienced in such matters.
The 🔗Finance Law Group of Daeryun Law Firm LLP, in which attorneys experienced in asset management collaborate with specialists in particular fields such as certified public accountants and tax accountants, provides assistance for victims of investment fraud through stock chat rooms and the like.
If you wish to obtain the assistance of a specialist on this matter, you are welcome to request a legal consultation at any time.
