President Lee Jae-myung has promised to introduce a Korean-style fair fund (justice compensation fund) to aid capital market victims who have been subjected to incomplete sales or price manipulation, amidst calls for enhanced compensation for those reporting unfair practices. As attempts to violate capital market laws become increasingly sophisticated, the role of whistleblowers is inevitably growing.
President Lee proposed the establishment of a justice compensation fund as one of his pledges in the capital market sector during the presidential election. The plan is to set up a justice compensation fund under the Financial Services Commission to use part of the penalty surcharges or fines imposed for unfair or illegal activities in the capital market for victim compensation. A bill for the justice compensation fund, already introduced by Democratic Party of Korea lawmaker Park Sang-hyuk, is currently under consideration by the National Policy Committee and the Strategy and Finance Committee.
The justice compensation fund is modeled after the fair fund in the U.S. The fair fund is a fund that uses penalty surcharges levied against violators to compensate investment victims. The U.S. established its fair fund using civil penalties and recoveries of unjust enrichment collected from those who violated securities laws in 2002. Under current law, Korea allocates the penalty surcharges and fines imposed in the capital market to the national treasury.
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