KOSPI Reaches 7,000 Mark Amidst NTS Crackdown on Stock Market Fraud

As the KOSPI index crosses the historic 7,000-point mark, the National Tax Service (NTS) has initiated a crucial second wave of tax investigations targeting 31 entities accused of engaging in fraudulent activities within the stock market. This move is designed to curb market manipulation, illicit capital outflows through 'tunneling,' and the operation of illegal online investment advisory services, often referred to as 'leading rooms.' The NTS's proactive stance aims to foster a more transparent and trustworthy 'Korea Premium' in the financial markets.

This latest probe, announced on the 6th, comes just ten months after a similar investigation in July of the previous year, which successfully recovered 257.6 billion won from 27 companies. The current investigation focuses on 11 firms accused of inflating stock prices through false information and exaggerated financial statements, ultimately harming small investors. One particularly egregious case involves a KOSDAQ-listed company that allegedly inflated its stock price through 20 billion won in fictitious invoices, causing significant losses to shareholders when trading was halted. The company's CEO is also accused of embezzling billions of won by improperly transferring company assets, including a luxury apartment with a Han River view.

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We will firmly establish the perception that no profit can be made from unfair trading in the stock market, and that it will only lead to a greater tax burden.

Furthermore, the NTS is scrutinizing 15 companies suspected of tunneling, where corporate funds are siphoned off through shell companies, and their major shareholders. One manufacturing firm, NSa, is under investigation for allegedly funneling 2 billion won to relatives as excessive salaries and spending 8 billion won on personal legal fees, treating company funds as personal assets. Additionally, five illegal online investment advisory firms are being investigated, including one that allegedly manipulated stock prices by recommending pre-purchased stocks to its followers on YouTube. The NTS has vowed to ensure that no profit can be made from unfair trading practices, emphasizing that such actions will result in substantial tax liabilities and potential criminal prosecution through referrals to investigative agencies.

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In the course of the investigation, if acts of tax evasion such as destruction of evidence or concealment of assets are confirmed, we will refer them to the investigative authorities for criminal punishment.