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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, October 30, 2025 — A series of insider trading, embezzlement, and breach-of-trust cases involving employees at major South Korean brokerages has reignited debate over the industry’s weak internal controls and ineffective compliance systems, despite repeated regulatory warnings and structural reforms.
According to financial industry sources, the Joint Task Force for Stock Manipulation Prevention—comprising the Financial Services Commission (FSC), Financial Supervisory Service (FSS), and Korea Exchange (KRX)—conducted a raid on NH Investment & Securities’ headquarters in Yeouido, Seoul, on October 28.
Authorities are investigating allegations that a senior executive in the firm’s investment banking (IB) division exploited non-public information related to tender offers for personal gain. The executive is suspected of earning KRW 2 billion (approx. USD 1.5 million) in illicit profits by trading in 11 stocks managed by NH Investment & Securities over the past two years.
This marks the second raid on NH Investment & Securities this year. In July, regulators searched the firm’s offices over similar allegations of insider trading involving its M&A team. Despite the firm having established a compliance task force in April last year and consulting external experts to redesign its risk governance structure, the latest incident has reignited criticism over NH’s weak compliance enforcement.
NH is not alone. In October 2024, Shinhan Investment & Securities reported a KRW 130 billion internal control failure, after an employee in the liquidity provision (LP) unit made unauthorized futures trades that resulted in massive losses undetected by the firm’s risk management systems.
More recently, DB Financial Investment was hit by a KRW 35.5 billion embezzlement scandal, in which an employee forged company seals and misused corporate credentials to cash out gift certificates over nearly ten years (2016–2025). Investigators cited poor contract monitoring, inadequate ID management, and lax oversight of corporate seals as key causes for the prolonged misconduct.
Financial regulators have warned that these repeated compliance lapses highlight systemic weaknesses across South Korea’s brokerage sector, calling for tighter supervision, stronger whistleblower protection, and mandatory real-time audit systems to detect high-risk transactions.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
