"Information is the lifeblood of Wall Street, and it is valuable only when you have it before others do."
American columnist Michael Kinsley made that jab at Wall Street in 1986, when the Street was seething over insider trading. Forty years on, South Korea's capital market is hardly free of that old warning. What matters more than whether someone knew first is how they came to know. The market cartels that surface with unsettling regularity have repeatedly blurred the line between a legitimate information edge and a covert privilege.
The latest case involves financial professionals who met through an elite university's business club and a global consulting firm and who are accused of trading non-public information obtained on the job over five years, reaping more than 20 billion won in illicit gains. What put them a step ahead of the market was not exceptional instinct or skill but their positions. Moving through senior posts at private equity funds and listed companies, they were simply able to see facts not yet known outside — mergers and acquisitions, tender offers and the like — before anyone else.
The law has not ignored this risk. The 2013 CJ E&M case, in which non-public information passed through an analyst to fund managers, exposed a blind spot: it was difficult to hold secondary or more remote recipients of information accountable. Penalties have been tightened repeatedly since, including a 2014 amendment to the Capital Markets Act that created rules against market order disruption. Over more than a decade the regulatory net has grown finer, tracing the routes by which information leaks. Yet those who know its gaps best have found side roads to line their own pockets.
Meeting securities firm chief executives on the 29th, Financial Supervisory Service Governor Lee Chan-jin said the securities industry "cannot be assured of its future if it fails to earn investors' trust," and called for expanded investor education and social contribution programs. But the fundamental problem shaking the market's foundation is the collapse of the belief that everyone trades from the same starting line. However savvy investors become, fair competition can scarcely exist in a market where the other side can look at the answer sheet in advance.
The privilege of knowing first is inseparable from the responsibility not to use that information for private gain. A firm's "red team" must not remain an internal control mechanism in name only. The market entrusted these people with the authority to look first; it never granted them the right to take a cut. To build trust, the first place to look may not be the eye level of ordinary investors but the fingertips of market professionals.
