In a significant shift to combat stock market manipulation and other unfair trading practices in South Korea, the Financial Services Commission has proposed amendments to the Capital Market Act and related regulations. The most notable change is the abolition of the previous limit on reward payments for whistleblowers, which was capped at 3 billion won (approximately $2.5 million). Under the new proposal, whistleblowers could receive up to 30% of the recovered illegal gains or penalties associated with identified wrongdoing, incentivizing individuals to report such activities.

The government acknowledges that crimes like stock price manipulation are often organized and sophisticated, making detection and evidence collection challenging. The rationale behind the legislative change is that the risks associated with reporting have previously outweighed the rewards, discouraging potential whistleblowers. By streamlining the reward calculation process to focus solely on the amount of illegal gains or penalties and the whistleblower's contribution, the government aims to create a clearer and more motivating incentive structure, thereby improving compliance and reporting rates.

One illustrative example of the potential financial impact of this new reward structure is a recent case involving a prominent financial expert accused of market manipulation, with potential penalties estimated at up to 80 billion won. Should a whistleblower provide critical information leading to successful enforcement actions in such a case, they could receive as much as 24 billion won as a reward. This initiative is expected to bolster efforts to eradicate stock market manipulation and enhance transparency within the financial sector, while also setting a precedent for future whistleblower protections and incentives in South Korea.