REGULATION ON

SECURITIES CRIME INVESTIGATION BUSINESS

Regulation on Securities Crime Investigation Business

CONTENTS

I.	General Provisions

§1.	Purpose

§2.	Definitions

§3.	Relevant Statutes

§4.	Confidentiality

§5.	Applicability

II.	Securities Crime Investigation

§6.	Subject of Investigation

§7.	Conversion to Securities Crime Investigation

§8.	Secret Investigation for Field Inspection

§9.	Preparing Investigation Plan

§10.	Principle of Warrant

§11.	Applying for Warrant for Seizure·Search

§12.	Execution of Securities Crime Investigation

§13.	Seizure·Search or Detainment

§14.	Preparing Affidavit for Seizure·Detainment

§15.	Management of Articles Seized or Detained

§16.	Examination

§17.	Preparing Statement of Questions and Answers

§18.	Investigation Requested While Securities Crime Investigation Is Underway

§19.	Reporting on Investigation Results

III.	Disposition of Investigation Results

§20.	Disposition of Investigation Results

§21.	Report, Etc.

§22.	Cleared of Suspicion

§23.	Preservation and Charge of Articles of Evidence

IV.	Supplementary Provisions

§24.	Form of Documents

§25.	Retained Documents

§26.	Preservation of Books and Documents

§27.	Authorization

Addenda

Enacted on March 19, 2002. FSC 2002-2

CHAPTER 1.

GENERAL PROVISIONS

§1. Purpose

The purpose of this Regulation is to prescribe matters necessary for the Securities and Futures Commission (hereinafter, "the SFC") to delegate investigative authority provided under Article 206-3 of the Securities and Exchange Act (hereinafter, "the Act") to the Chairman of the SFC pursuant to the provisions of Article 206-2 paragraph (4) of the Act and Article 90-2 paragraph (2) subparagraph 2 of its Enforcement Decree, whereby the investigative business of the SFC may be facilitated in equity.

§2. Definitions

The terms used herein this Regulation are defined as follows.

1. The term "securities crime investigation" means investigative activities carried out by utilizing investigative means provided under Article 206-3 paragraph (7) of the Act for the purposes of verifying offender and facts of crime based upon suspicion that offense has been committed against Articles 188, 188-2 and 188-4 of the Act (hereinafter, "securities crime").

2. The term "investigator" means an official of the Financial Supervisory Commission (hereinafter, "the FSC") designated  by the Attorney General and commissioned by the Chairman of the SFC to conduct securities crime investigation pursuant to the provisions of Article 90-4 paragraph (2) of the Enforcement Decree of the Securities and Exchange Act.

3. The term "secret investigation" means an investigation conducted by indirect means to find facts and determine specifics in connection with the charge of securities crime in a secretive manner.

§3. Relevant Statutes

This Regulation shall govern the investigative business of securities crime unless prescribed otherwise by other statutes.

§4. Confidentiality

Investigator involved in a securities crime investigation shall not disclose confidential information obtained in connection with the investigation while in office and thereafter.

§5. Applicability

The Regulation on Securities and Futures Investigation (hereinafter, "the investigative regulation") shall govern matters concerning securities crime investigation not covered in this Regulation.

CHAPTER 2.

SECURITIES CRIME INVESTIGATION

§6. Subject of Investigation

Subject of securities crime investigation shall include clear and specific suspicion of act in violation of Articles 188·188-2 and 188-4 of the Act following secret investigation conducted in advance based upon information obtained in the course of conducting business, notification of review results by the KSE and other reported information, where applicable under the following.

1. Where there is a decision by committee on investigation of unfair trade and review pursuant to the provisions of Article 61 of the investigative regulation

2. Where there is a potential that securities market or equity in the order of securities transactions may be adversely affected

§7. Conversion to Securities Crime Investigation

(1) Where it is applicable under any of the following subparagraphs while investigation is in progress pursuant to the investigative regulations (hereinafter, "general investigation"), the investigation concerned may be converted into a securities crime investigation.

1. Where general investigation resulted in discovery of evidence such as books, documents, and materials warranting charge for securities crime (hereinafter, "articles of evidence"), and where the suspect does not consent to the production of articles of evidence

2. Where seizure or search is inextricable because of clear intent to conceal articles of evidence in place of business or office as a result of general investigation

3. Where investigation is obstructed by acts of interference such as submission of false information and forged materials

(2) The head of investigation division of the FSS may request for investigation pursuant to this Regulation in consultation with personnel in charge of investigative business of the FSS (hereinafter, "the head of investigation planning division") by attaching statement of reasons for conversion where it is recognized as necessary to convert general investigation into securities crime investigation.

(3) Where general investigation is converted into securities crime investigation pursuant to the provisions of paragraphs (1) and (2), the investigation shall be conducted in accordance with this Regulation.

§8. Secret Investigation for Field Inspection

(1) Investigator may conduct a secret investigation to reexamine specifics of suspicion or charge for the securities crime concerned and inspect the scene selected to seize, search or detain such as hiding place for articles of evidence.

(2) Where secret investigation is conducted for the inspection of scene, the investigator shall determine routes and circumferences of the scene to seize, search or detain, the number of people to mobilize and necessary equipment, and shall report a statement concerning the result of secret investigation, commencement date and investigation method to the Chairman of the SFC.

(3) The report provided under paragraph (2) shall be governed by 『Report on Secret Investigation for Field Inspection (Annexed Form 1)』

§9. Preparing Investigation Plan

(1) Plans for investigation of securities crime shall be so prepared as to secure articles of evidence based upon the Report on Secret Investigation for Field Inspection.

1. Subjects for investigation

2. Place to seize, search or detain and the location·name·map

3. Commencement date of the investigation

4. Methods of investigation

5. Name·trade name and place of business of the subject of investigation

6. Number of people and equipment needed

7. Cautions for Launching Investigation

(2) Methods of investigation provided under paragraph (1) subparagraph 4 shall be classified as investigation by seizure·search or investigation by custody following voluntary submission.

§10. Principle of Warrant

When investigator seizes or searches for the securities crime investigation, he or she shall have obtained warrant issued by a court of law; provided, however, articles voluntarily submitted by owner, possessor or bailee, or articles lost may be detained without warrant.

§11. Applying for Warrant for Seizure·Search

(1) Investigator shall apply for a warrant for seizure·search to the Chief District Attorney of the District Attorneys' Office having jurisdiction in accordance with the『Application for Warrant for Seizure or Search (Annexed Form 2)』.

(2) When applying for a warrant for seizure·search, effective term, personal data of the person subject to investigation, place of seizure·search, articles to seize and reasons for seizure·search shall be stated, and the warrant shall be applied for by each place to be seized or searched. Where data supporting to prove facts of the charge concerned are available, they may be attached.

(3) Where warrant for seizure·search has been applied for, information shall be provided appropriately in the『Register of Warrants for Seizure and Search (Annexed Form 3)』.

§12. Execution of Securities Crime Investigation

(1) Where investigator initiates execution of the securities crime investigation business, he or she shall do so after presenting order of investigation and warrant for seizure and search and declaring intent to execute the securities crime investigation before the subject of investigation; provided, however, that in the event of detainment and absent warrant for seizure·search, he or she shall obtain consent to voluntary submission of articles of evidence.

(2) Consent to voluntary submission provided under paragraph (1) means to 『Consent Form (Annexed Form 4)』.

§13. Seizure·Search or Detainment

(1) Where investigator seizes, searches or detains, he or she shall allow owner, possessor or bailee of the articles of evidence to observe the process to ensure equity in procedures.

(2) Where observance provided under paragraph (1) is denied or absent any person, public servant or police officer of the city or county having jurisdiction shall be present.

(3) Where articles seized or detained are inconvenienced for transportation or storage, owner, possessor, bailee, or government office may be required to store the articles.

(4) Where articles are kept in storage pursuant to paragraph (3),  investigator shall obtain a certificate of receipt from the bailee and declare that the articles were so seized or detained in accordance with 『Storage Form (Annexed Form 5)』.

§14  Preparing Affidavit for Seizure·Detainment

(1) Where seizure·search or detainment is completed, investigator shall prepare, sign and seal two copies of 『Affidavit for Seizure·Detainment (Annexed Form 6-1)』 and 『List of Articles under Seizure·Detainment (Annexed Form 6-2)』, one copy each of which shall be retained by owner, possessor, bailee or any person of equivalent status.

(2) When the observer does not or cannot sign and seal, its reason shall be added at the bottom space for "details" of the Affidavit for Seizure·Detainment.

§15. Management of Articles Seized or Detained

(1) Articles of evidence seized or detained shall be examined at once and restored with a receipt taken when not related to the investigation of securities crime and not expected to be necessary, while it is conducted to be produced whenever it is necessary.

(2) When there is a demand for temporary restoration of the article of evidence from the owner, possessor, custodian or a party who produced them pursuant to Article 133 paragraph (1) of the Criminal Procedure Act, a return shall provisionally be made after photographing or taking other necessary measures to preserve the original status, or keeping a copy marked "Collated with the original" and taking a receipt of the original.

§16. Examination

(1) Where investigator initiates investigation, he or she may interrogate a suspect of the securities crime or a party concerned about matters under suspicion. However, it may be omitted when it is deemed  inadequate in accordance with the record, character and conduct of the suspect of the security crime or a party concerned or the circumstances,.

(2) A statement of questions and answers (Annexed Forms 7-1 and 7-2) or a confirmation (Annexed Form 8) shall be executed with respect to details of the statement under paragraph (1) with signature and seal of the investigator and the suspect of the securities crime or a party concerned. However, when the suspect of the security crime or a party concerned does not or cannot sign or seal, its reason shall be attached thereunder.

§17. Preparing Statement of Questions and Answers

(1) Where investigator has discovered grounds for the suspicion of securities crime, he or she shall execute a statement of questions and answers with the suspect or party concerned.

(2) Where the suspect of securities crime or the party concerned evades to execute the statement of questions and answers or refuses to sign and seal, a statement of reason shall be added with the investigator's signal and seal on it.

§18. Investigation Requested While Securities Crime Investigation Is Underway

Investigator may apply for investigation to the prosecution where suspicion is reasonable, and where matters applicable under the following exist during the investigation of securities crime

1. Where the dwelling of suspect is unknown;

2. Where there is a potential that the suspect might destroy evidence;

3. Where there is a potential that the suspect might flee or is likely to flee.

§19. Reporting on Investigation Results

When the investigator concludes the Investigation of securities crime, he or she shall report the result to the Chairman of the SFC without delay.

CHAPTER 3.

DISPOSITION OF INVESTIGATION RESULTS

§20. Disposition of Investigation Results

Articles 35 through 60 of the investigative regulation shall apply to the disposition of the results of securities crime investigation.

§21. Report, Etc.

(1) When there is seized article in the event an investigator prosecutes, reports to the prosecution, applies for investigation of  securities crime (hereinafter, "report and etc."), the investigator shall deliver seized articles with a list to the prosecuting attorney in charge.

(2) The prosecutor shall notify the bailee that the seized article under paragraph (1) has been delivered.

(3) When the investigator reported the suspect and etc., ex post management shall be pursued with respect to the disposition of the district attorneys' office or judgment of the court.

§22. Cleared of Suspicion

The Chairman of the SFC shall clear of suspicion and restore seized or detained article when he or she did not gain a confident belief in securities crime from the investigation.

§23. Preservation and Charge of Articles of Evidence

(1) When the leader of investigation of the securities crime finished the investigation, he or she shall preserve and take charge of articles of evidence concerning facts constituting the offense for a fixed period.

1. When the judgment of the court has become final in the event of prosecution, etc.

2. When lapse of the term of objection in the event of imposing minor fines or fine for negligence. However, when litigation proceedings are finished in the event the administrative litigation is instituted,

(2) When there is a demand of restoration of an article in custody under paragraph (1), the article shall be restored in accordance with Article 15 paragraph (2).

(3) Other articles of evidence not related to the litigation may partly be restored.

CHAPTER 4.

SUPPLEMENTARY PROVISIONS

§24. Form of Documents

Document or books the investigator use in respect of investigation of securities crime shall follow the form in table 1 or table 8.

§25. Retained Documents

The head of investigation planning team shall keep, record and manage a request book of warrant for seizure·search.

§26. Preservation of Books and Documents

The period of preservation for request book of warrant for seizure·search is three years, and for written opinion concerning the result and management of the investigation and file of record concerning a case is ten years.

§27. Authorization

The Governor may determine specifics necessary for the enforcement of this Regulation on a separate basis.

Addendum

This Regulation shall be effective on the date of promulgation.