frontrunning

Feb. 6 (Asia Today) — President Lee Jae-myung reaffirmed a zero-tolerance stance on stock manipulation Thursday, warning that those who undermine market order face severe consequences, as authorities intensify an investigation into alleged front-running by journalists.

Lee posted the message on X after sharing a report that investigators searched the headquarters of Korea Economic Daily, writing that stock manipulation leads to “total ruin.” His remark was widely interpreted as a warning against unfair trading practices as the government’s joint crackdown gains momentum.

Financial authorities said the joint task force raided the newspaper’s Seoul office Wednesday. Five reporters are suspected of front-running – allegedly obtaining market-moving information in advance, purchasing shares, publishing related articles and then selling the stock after prices rose to secure profits.

Front-running is prohibited under South Korea’s Capital Markets Act and is classified as a fraudulent trading practice when information obtained through reporting or other nonpublic means is used for personal gain. Authorities said they are reviewing seized materials to determine whether criminal charges apply.

Lee’s comments align with his repeated warnings in recent weeks. Last month, after the KOSPI index surpassed the 4,700 level for the first time, he cautioned that stock manipulation would bring irreversible consequences, pledging to foster a “healthy capital market.”

At the time, Lee also shared news that the joint task force would expand from one team to two and urged investors to “invest properly.” The move followed his directive to strengthen enforcement by introducing multiple response teams. The Financial Services Commission, the Financial Supervisory Service and the Korea Exchange later agreed to reorganize and expand their market surveillance units.

In a policy briefing last December, Lee cited distrust in market transparency as a key factor behind the chronic undervaluation of South Korean equities and called for tougher enforcement to ensure that illegal trading is met with decisive punishment. He also ordered an expansion of enforcement personnel after learning that fewer than 40 staff members were handling stock manipulation cases at the time.

Thursday’s message was seen as reinforcing the administration’s principle that market abuses will be dealt with strictly and without exception, regardless of the individuals or institutions involved, signaling heightened scrutiny as stock prices continue to rise.

— Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260206010002371