Financial authorities have decided to eliminate the upper limit on reward money paid to whistleblowers who report stock price manipulation or accounting fraud. The rewards will now be paid at up to 30% of the illicit gains or fines recovered, without monetary restrictions. The move aims to encourage insiders to actively report covert unfair trading practices or accounting irregularities.
On the 25th, the Financial Services Commission announced that it will conduct a legislative preview until the 7th of next month for amendments to the enforcement decrees and subordinate regulations of the Capital Markets Act and External Audit Act. Currently, rewards for reporting unfair stock market practices, such as stock price manipulation or insider trading, are capped at 3 billion Korean won. For accounting fraud, including window dressing or intentional omissions, the reward limit is 1 billion Korean won.
Critics have long pointed out that even when insiders uncover large-scale stock manipulation cases involving hundreds of billions to trillions of won, the low reward amounts discourage reporting. The Financial Services Commission stated, “Unfair trading and accounting fraud are organized, intelligent crimes that are difficult to detect and prove. While insider information can play a decisive role, the compensation has not been sufficient compared to the risks of reporting.”
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