Given that fundamental systems maintaining and classifyingmodern society are politics system, economy system, and science and technology system, one of the distinct characteristics of contemporary society is that the economy system is developing into a more complicated and sophisticated form especially along with growth of finance system, one of subsystems of the economy system.
Today’s finance system takes a role as a vein activating and flourishing society and economy, in a macro view, but it is also a market for individuals and enterprises to invest and purvey capital, in a micro view.
This finance system, especially called as capital market in our society, desperately needs demonstration of regulations and deregulations, derived from of its own nature. In one hand, it needs deregulation for growth because of its nature of capital market, changing and growing in a diversified way. In the other hand, however, it needs appropriate regulations to protect society and individuals from its nature propagating unlimited desire and greed like a car without a break system.
The law for capital market and finance investment - ‘capital market law’ - which has implemented since 2009, reflects the needs of the times, the demonstration of regulations and deregulations. The specification of Section 1 of the capital market law, "This law is forcontributing to development of national economy by increase the justice, trustworthiness and efficiency of capital market, cultivating grounds for healthy financial investments, stimulating innovation of finance in the capital market and protecting investors.", carefully illustrates this issue. This is the rationale behind new capital market law to concretely realize the legislative motivation by fractionized characteristics: changing into negative system and regulation based on functionalism, expanding the range of business and modernizing investor protection system.
Diverse unjust trades in current capital market, however, made the capital market law become more sophisticated but negative type of regulations for guaranteeing the practical effect. Unlike previous stock trade law or futures trade law, laws for regulating unjust trade under current capital market law pursues to practically regulate various unjust trades by implementing strengthened regulations on the usage of exclusive information,on market manipulations and on negative unjust prevention rules. Considering characteristics of current capital market law, this study mainly focused on volume 4 under capital market law which provide for usage of exclusive information, market manipulations, unjust trade and short stock selling. This is for typifying unjust trades in changing capital market though interpreting types of unjust trades in volume 4in a legal perspective.
For example, in the case of prevention of usage of exclusive information, it added employees of affiliates and the person who is carrying on contracts in the list of internal parties as the possibilities of using exclusive information became higher with expanded range of finance investment product. In the case of manipulating market, the range of regulation expanded volume 4 under section 176 of the capital market law by adding new rules for preventing two-way future and cash trade and derivative stocks. Regulation for unjust trade under section 178of capital market law, however, is the most distinct legislation of unjust trades. Thisis because this regulation does not specify the subject, expand objects into finance investment product from stocks or choose location or objective subjected to application; all these negative regulations made minimal gap among regulations. Also, section 180 under capital market law prevents short stock selling in theory and specifies the exceptions.
This study specifies unjust trade and demonstrates how unjust trade goes into investigation level by legal interpretation of unjust trade. It also used practical resources and figures to understand unjust trade in capital market, re-examine theories and practices of Korea Exchange or Financial Supervisory Serviceto find practicality of regulations. By analyzing actual cases, the study found unjust trades altered in much larger, detailed and complicated way and led an increase of the number of big cases as well asthe number of people violating laws is in increase. It also found that unjust trades of ELW, derivative or false notification are frequently committed and the number of violation of usage of exclusive information is much higher than that of traditional ways of manipulating market.
Through this practical analysis, the study examines the justice of regulations for unjust trades in a sense of capital market law by revisiting the concept of protecting investors, trusts and function of market and finance system.
The purpose and justice of these regulations concretes the justice of constitutionalism regulating diverse unjust trades including usage of exclusive information, manipulation of market as well as declaration system and regulations for financial investments, despite of some controversial opinions.
This study analyses potential and limitations of criminal regulations against unjust trade in capital market and illustrates three criminal policies needed for the efficiency of regulations. In other words, regulations for unjust trades under current capital market law should elaborate in three aspects: effectiveness of regulation, efficiency of regulation and efficiency of practices. The effectiveness of regulation measures how many crimes are controlled and prevented by the regulation. The efficiency of regulation, however, measureswhether the regulations are wide enough to include unjust trades and be applied to subjects under the regulation. Finally, the efficiency of practices means whether the investigations held by financial regulatory institutes, prosecution and courts have enough capacity to reach the effect of regulations. These analysis set premises that tensions and demonstrations between regulations and deregulations; the view of narrow interpretation of unjust trade regulations and view of willing to expand applicablerange to keep the legitimate motivation, the trust toward capital market.