KOSPI breaks through 7,000 points, "financial internet celebrities" face increased regulation... to prevent side effects

As the KOSPI breaks through the 7,000-point mark and investment enthusiasm runs high, financial authorities have officially begun working to improve relevant systems to curb illegal investment-inducement conduct by online financial influencers (Pinfluencers) that seeks to expand its influence online.

According to financial authorities on the 7th, the Financial Committee—chaired by Byun Jaeho, Director of the Capital Markets Bureau—held its first meeting on the 6th, aimed at improving regulation of financial Pinfluencers. “Financial Pinfluencer” is a portmanteau of Finance and Influencer. It refers to individuals or channel operators who share investment information such as stocks, virtual assets, and funds via YouTube or social networking services (SNS). The problem is that they do not simply express opinions; increasingly, there are cases where they urge viewers to buy specific stocks, or spread unverified information in either paid or free formats, thereby disrupting market order.

At this meeting, the Financial Committee also reviewed representative potential illegal acts and the enforcement capacity of the existing legal framework. For example, recommending particular stocks without reporting similar investment advisory business could violate Article 101 of the Capital Markets Act. However, on the ground in actual enforcement, because content takes many forms—videos, livestreams, posts, and more—and expressions are often rather oblique, it is difficult to respond quickly and proactively based solely on existing provisions, which has drawn criticism. The financial authorities are moving to discuss improving the system rather than merely focusing on crackdowns; the background for this is also related to that.

The part the authorities are especially sensitive to is the issue of conflicts of interest. Because what appears to be an objective analysis may, in practice, conceal interest linkages such as advertising contracts or pre-held positions. Officials from the financial authorities explained that the core issue is: when financial Pinfluencers give positive assessments of a particular asset, investors find it hard to determine whether it is the result of professional judgment or whether it is based on external interest relationships. Given that controversial cases have emerged overseas—for instance, certain individuals buy particular stocks in advance before uploading positive videos to induce price increases—heightened domestic Korean vigilance toward similar behavior is also underway.

The Financial Supervisory Service is also strengthening monitoring measures. Previously, it relied mainly on manual screening and confirmation of relevant content, but recently it has shifted to a real-time monitoring system based on artificial intelligence (AI). Its setup is that AI analyzes collected videos, categorizes the likelihood of violations, and for cases with higher risk, it will also conduct deeper investigations by combining the contents of reports with market information. This month, a dedicated monitoring task force focusing on illegal conduct by financial Pinfluencers has also started operating. This is because the more the market surges or becomes more volatile, the more easily unverified investment information tends to spread rapidly.

Recently, due to increased volatility in financial markets influenced by the situation in the Middle East, and with the KOSPI breaking through 7,000 points for the first time on the 6th, individual investors’ attention has further risen. The higher the level of investment enthusiasm, the more easily enticing promises of returns or biased stock recommendations gain traction. Therefore, the authorities appear to be trying—through this discussion on improving the system—to establish the most basic rules for the online investment information market. In the future, this direction may evolve toward strengthening illegal advertisement labeling, disclosing conflicts of interest, and setting enforcement standards for unregistered investment advisory activities.