Korea’s securities regulators will be entitled to investigate alleged stock manipulation cases with “special criminal authority” under the Park Geun-hye administration’s commitment to weeding out unfair trading.

The government unveiled policies Thursday to grant criminal authority to Finance Services Commission investigators monitoring the brokerage industry and some nongovernmental inspectors at the Financial Supervisory Service.

“The authority allows the securities inspectors to immediately hand over suspects to the prosecution,” policymakers said in a joint release by the FSC, FSS, Ministry of Justice, National Tax Service and Korea Exchange.

The FSC and its executive arm FSS currently have to make inquiries into stock-rigging cases for several months before the regulators can file a compliant with the prosecution against suspects.

Under the new authority, inspectors will be empowered to refer to mobile communication or Internet usage records and prohibit a suspect’s departure from the country.

In addition, an offender will be levied fines up to four times the value of his or her irregular stock gains. The tough sanction will be finalized through the prosecution’s indictment and the court’s verdict, apart from imposing a possible prison sentence.

As regulatory officials from the FSS are not public servants, the authority will only be granted to figures who are dispatched to the FSC for joint probes.

In a bid to boost the whistle-blowing system, policymakers are sharply raising rewards. A reward of up to 2 billion won ($1.75 million) will be given to anyone who reports fraudulent stock trading cases to the FSS or the Korea Exchange, compared with the current level of up to 300 million won.

The moves came after President Park stressed the need to toughen measures clamping down on stock scammers.

Park has vowed to stem unlawful acts that can harm the livelihoods of individuals and the underprivileged. She centered her focus on the stock market as price rigging often results in massive financial losses for small investors.

FSS Gov. Choi Soo-hyun has vowed to expand its regulatory manpower to effectively detect stock rigging practices.

To raise the probe’s efficacy, Choi, who took office last month, stressed that the FSS is considering “increasing the number of inspectors for stock scams in the brokerage industry.”

He also said the FSS plans to establish a department to oversee irregular intra-group share trading in the conglomerate sector.

His remarks mean that the regulator is seeking to rigidly reprimand both stock manipulators and conglomerate-based financial firms that engage in irregular deals with their manufacturing affiliates.

By Kim Yon-se (kys@heraldcorp.com)