[비즈한국] Discussions are officially underway to grant the Financial Supervisory Service (FSS) Capital Markets Special Judicial Police the 'authority for cognitive investigation,' which would allow them to independently detect and investigate suspected crimes. Currently, the authority of the FSS Special Judicial Police is limited to initiating and conducting investigations only into 'cases under the direction of a prosecutor' among crimes stipulated by the Capital Markets Act. The proposal aims to grant them the 'power to investigate cases based on intelligence gathered.' Legal experts analyze this as a measure to fill the potential void in punishing financial crimes, such as stock manipulation, that may arise during the process of adjusting or dismantling the prosecution's investigative powers.
Increased Power After Governor Lee Bok-hyun's Inauguration
Although the FSS Special Judicial Police are civilian status, they have been able to exercise investigative powers similar to the police under the direction of the prosecution.
Originally, it was an organization that directly investigated unfair trading in the capital markets under the prosecution's command, but it expanded its scope of investigation following a reorganization in 2022. In 2024, it also established a Rapid Response Team and a Digital Forensic Team. The investigative staff has also increased to 51 people.
These were scenes demonstrating 'changed power' following the inauguration of FSS Governor Lee Bok-hyun, a former prosecutor. The FSS Special Judicial Police directly summoned and investigated Kakao035720 founder Kim Beom-su, and achieved results such as arresting and indicting two individuals for front-running by former and current reporters in 2025.
However, until now, they were merely one of the 'prosecution's blades.' Currently, the FSS Special Judicial Police can only investigate cases transferred after a resolution by the Securities and Futures Commission (SFC) under the Financial Services Commission, or cases under the direction of a prosecutor. Since compulsory investigations such as search and seizure are only possible with a prosecutor's direction—from the SFC resolution process to after the transfer—they are effectively under the investigative command of the Seoul Southern District Prosecutors' Office.
The government is discussing ways to strengthen the role of these FSS special judicial police. The core of this discussion is to expand the investigative scope of the special judicial police, which is currently limited to 'cases under the direction of a prosecutor' under the Capital Markets Act, to enable 'cognitive investigations' based on intelligence.
If granted the authority for cognitive investigation, the FSS Special Judicial Police will be able to detect suspicions through their own market monitoring and immediately launch investigations without external instructions. Aside from needing to apply for warrants to the prosecution like the police, they would essentially possess status equivalent to a financial police force.
Expanding Authority Amid Government Stance: “Stock Manipulators Will Be Ruined”
This appears to reflect the strong will of the Lee Jae-myung administration to eradicate stock manipulation crimes, which are becoming increasingly intelligent and organized. Since taking office, President Lee Jae-myung has repeatedly criticized stock manipulators strongly, saying, “Stock manipulators should be ruined.” With the prosecution being dismantled and its direct investigative powers shrinking this year, a model of transferring 'a portion of the prosecution's powers' to the FSS, which is on the front line of capital market monitoring, is being discussed as an alternative.
A legal expert with experience being dispatched to the FSS assessed, “The existing FSS Special Judicial Police contributed to investigations by playing a role like that of specialized prosecution investigators. If they gain the authority for cognitive investigation, the FSS will become a financial crime specialized police force that collects its own intelligence and conducts direct investigations.”
Within the financial authorities, a positive sentiment is emerging that “if a unified system from investigation to prosecution is established, prompt responses to stock manipulation groups will become possible.” However, some express concern that the FSS's power will become excessively inflated if cognitive investigation authority is granted.
A prosecution official who worked at the Seoul Southern District Prosecutors' Office expressed concern, stating, “FSS alumni are recently receiving many offers to act as advisory committee members for large law firms, and if the special judicial police system is expanded, former members will flock to law firms or specific companies and intervene in cases like 'former officials (jeon-gwan).' The problem is that since the FSS is not an investigative agency, I am not sure how much ethical awareness they have regarding this.”
However, the Lee Jae-myung government's strong will to root out 'stock manipulation offenders' serves as a positive backdrop for the expansion of the FSS Special Judicial Police's authority. Related legislation is also gaining momentum within the ruling party. Recently, Democratic Party lawmaker Seo Young-kyo proposed the so-called 'Stock Manipulation Principal Forfeiture Act (Amendment to the Act on Regulation and Punishment of Concealment of Criminal Proceeds),' which calls for the full confiscation and forfeiture of even the 'principal' invested by criminals into stock manipulation crimes.
Ahead of the prosecution's dissolution this fall, the legal community is paying attention to whether the 'expansion of FSS authority' will be realized before the new Major Crimes Investigation Agency (MCIA) is established. A legal expert who previously worked at the FSS explained, “The key in future government discussions will be how to devise supplementary measures to ensure the independence and investigative fairness of the special judicial police. Originally, the MCIA should take over financial crime investigative powers after the prosecution's dissolution, but it is a situation where the FSS is trying to 'get a slice of the pie' by saying they will also conduct 'direct cognitive investigations.' How the MCIA and the FSS will divide the investigative powers for financial crimes, which are 'the most lucrative cases by law firm standards,' is a point the legal community is watching closely.”