Chairman Kwon Yong-won of the Korea Financial Investment Association(KOFIA)

Korea Financial Investment Association (Kofia) will make sure that stock transactions using company funds to purchase shares and dividends for individuals are more clearly defined. Kofia will take action from the first quarter next year with its inspection of securities firms’ internal processes to deal with those matters.

Chairman Kwon Yong-won said Kofia should be ready to anything to regain investor trust in the stock market and securities firms by taking steps to preclude accidents involving stock market transactions through voluntary measures.

Kofia officially announced its plan for the move on Sept. 27, which is expected to reform the financial investment sector so that the sector would be able to regain stock investors’ trust by clearing up confusion aroused when a mishap by Samsung Securities declared the dividends on the “Our Company” shares owned by its employees that occurred in April.

The crux of the plan is to come up with measures to prevent any mistakes in handling stock buy orders, which included such key issues as the reconfirmation of the figures, the separation of the cash dividends from share dividends, and the instant nullification of the buy orders placed through the accounts handling the “Our Company” shares held by the officers and staff of the companies.

Kofia will check the securities firms to see if they have enough personnel assigned to improve their internal watch systems all told some 40 items, including the detailed makeup of the watch systems.

Kofia will compared the watch systems of every securities firms so that it will lead them to improve the systems by augmenting the weak parts of those systems.

Kofia will also see that a committee will be set up to take care of financial accidents that might occur, to be named as the Council for Financial Investors Reform. Kofia officials and members of the council will talk things over when an accident occurs involving the stock transactions to share information on the matter and jointly work out the measures for the accidents.

The association will also see that education involving ethical matters in stock market dealings will be strengthened so that all new employees of securities firms can gather regularly to get education on ethical issues.

The association will also consider including ethics on exams for the qualifications of personnel in charge of stock transactions, including those in charge of handling the buy and sell orders by including from 5 percent to 10 percent of the questions in the exams made up with those involving the ethical matters.

Korea Financial Investment Association engages in the development of the capital market and the financial investment industry in South Korea.

It provides rules and regulations establishment, standard agreements and advertisements reviewing, conduction of inspections of members, qualification exams registering and administering for financial professionals, and disputes resolving.

The company also provides FreeBoard, a systematized over-the-counter market for companies to unable to meet the listing requirements of the two national securities exchanges to trade their stocks; FreeSIS, which receives statistical data from the capital market and the financial investment industry; fostering and training for market professionals; and short-term speculative trading to long-term fundamental direct and indirect investment through public relations campaigns and education programs. Korea Financial Investment Association was founded in 2009 and is based in Seoul.

A view of the entrance of the building in Seoul, where KOFIA has offices. (Photos: KOFIA)