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Market price manipulation is a violation of the Financial Investment Services and Capital Markets Act, right? Can I also obtain damages for this?

Recently, a stock I invested in suddenly rose and fell sharply, so I thought it was strange, and later there was talk of market price manipulation. I bought at the price at that time and suffered a loss. Even in such a case, can it be regarded as market price manipulation, and can I claim damages for a violation of the Financial Investment Services and Capital Markets Act? What conditions are needed for compensation to actually be recognized?

Violation of the Financial Investment Services and Capital Markets Act

Answer to Related Inquiry

Author: 김국일

An investor who suffers a loss due to an act violating the Financial Investment Services and Capital Markets Act, such as market price manipulation, can claim damages under the 「Financial Investment Services and Capital Markets Act」.

First, where a person buys or sells stocks or derivatives, or entrusts such a transaction, at a price formed due to market price manipulation, the loss arising from that transaction is subject to a claim for compensation.

In addition, even if it is not the stock itself, compensation may also be recognized where a person suffers a loss by investing in other securities or related assets whose prices were affected by the market price manipulation.

Furthermore, where a person holds a financial product whose exercise of rights or settlement is made according to a specific price or index, and a loss occurs due to a price distorted by market price manipulation, a claim for compensation is likewise possible.

However, for compensation to be recognized, it is important to prove the causal relationship between the market price manipulation act and the loss.

That is, it must be objectively proven that the violation distorted the price and that a loss occurred as a result.

In addition, the right to claim damages is subject to a limitation period.

An investor, if they do not make a claim within 2 years from the day they became aware of the market price manipulation, or within 5 years from the day the market price manipulation act occurred, may have the right extinguished.

Ultimately, where a person suffers a loss due to a violation of the Financial Investment Services and Capital Markets Act, such as market price manipulation, a claim for damages is legally possible, but securing evidence and managing the limitation period are very important.

Therefore, it is desirable to review the legal response together with Daeryun after securing transaction records, the price trends at the time, related disclosures, and investigation materials.