South Korea is scrapping the cap on rewards paid to whistleblowers who report stock manipulation or accounting fraud, opening the door to large-scale payouts similar to a U.S. case in which an informant received about 370 billion won.
The Financial Services Commission (FSC) said Friday that amendments to the enforcement decrees of the Capital Markets Act and the External Audit Act were approved at a Cabinet meeting the previous day, aimed at improving the whistleblower reward system for stock manipulation and accounting fraud and strengthening the effectiveness of sanctions on accounting fraud.
Along with the removal of the payout ceiling, the existing complex reward calculation method will be replaced with a system that pays up to 30 percent of unjust gains or administrative fines.
Whistleblowers who report violations to other agencies, such as the National Police Agency or the Anti-Corruption and Civil Rights Commission, will also be eligible for rewards if their reports are referred to the FSC or the Financial Supervisory Service (FSS).
Even those who participated in violations may receive a portion of the reward, provided they did not coerce others into joining the misconduct or repeat violations within the past five years. The change is intended to encourage active reporting by participants who possess inside information.
In principle, rewards are paid after the administrative fine is actually collected. However, to address cases in which fines are delayed or never...
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