Financial Services Commission Research Articles

Assessing the need for a deregulation of the insurance sector of Mauritius to combat money laundering: a comparative study with Singapore and UK

PurposeThe purpose of this paper is to assess the current legal framework on money laundering control in the insurance sector. Essentially, this examination is premised on the interrogation of whether it is still appropriate for Mauritius to apply such stringent, opaque and unyielding Anti-Money Laundering/Combating Financing of Terrorism norms and rules on general insurance when developed nations such as the UK and Singapore have done away with them for a more effective combat against money laundering. It would also be assessed why the financial services commission (FSC) is not able to draw inspiration from its British and Singaporean counterparts in fighting money laundering more effectively.Design/methodology/approachThis paper uses the doctrinal legal research methodology which is colloquially described as “black-letter law” approach. It is backed up by a contextual legal analysis that is based on an analysis of relevant legal provisions. It relies ground experience from the insurance industry through the experience of the authors. A comparative approach is used with Singapore and the UK as case studies given that there are significant commonalities to the Mauritian jurisdiction as well as useful differences.FindingsIt is observed that a move towards a de-regulation of the legal framework on money laundering in the insurance sector with a more relaxed approach is more effective for the Mauritian insurance sector. Evidence is drawn from the Singaporean and British models. A re-structuring of the FSC of Mauritius is also warranted for such an approach to be adopted.Originality/valueThis paper is among the first academic contribution that proposes a de-regulation and the adoption of a relaxed approach of and by the Mauritian Insurance Industry for a more effective combat against money laundering. It serves as a legal foundational basis for further research in this direction.

부동산 조각투자의 법적 쟁점 및 규제

Recently, fractional investment for real estate (hereafter “FIR”), a new investment instrument that allows investors to buy expensive real estate with smaller capital, is gaining a lot of attention in the market. Fractional investment means owning a fraction or portion of the real property or the right of property, by more than one investor. In the Korean market, a real estate trust is mainly used as the form of transaction in relation to the FIR on the FIR investment platform, and there is also a case where a real estate fund is used. The current FIR instruments or services recognized in Korea, however, include some elements that may not be allowed by relevant laws and regulations such as the Financial Investment Services and Capital Markets Act (hereafter ”FISCMA”). Considering this respect, the FIR instruments currently available in the Korean market have been either designated as ”Innovative Financial Service” under the Special Act on Support for Financial Innovation or granted “Special Case for Demonstration” under the Act on Special Cases Concerning the Regulation of Regulation-free Special Zones and Special Economic Zones for Specialized Regional Development to grant regulatory exemptions, such that the FIR products can be transacted on the platforms through trust beneficiary certificates or collective investment securities, without obtaining authorization for financial investment business and permission for the exchange market of the FIR. But, the problem is that such regulatory exemptions are only temporarily granted. Therefore, all relevant laws and regulations should be rearranged before the exemptions expire for the FIR business entities to continue to engage in their businesses by obtaining approval based on the newly arranged rules. Or, they should immediately acquire the necessary license and permission for their business to comply with those regulations that have been exempted from the application so far. For reference, major global countries including the U.S., EU, and Singapore are also overhauling related regulatory systems to vitalize and internationalize the digital asset market. Due to the nature of the FIR structure based on an agreement on real estate management and disposal trust (hereafter “RTA”), the FIR investors hold beneficiary rights to get the distribution of profits earned from the operation and/or disposal of real estate trust in proportion to their investment amount. The two main forms of the FIR currently recognized in Korea are (a) sharing beneficiary right for the issued security where only one security is issued (so-called, “quasimiteigentum”), and (b) holding the beneficiary security where the security is equally divided into multiple securities among the investors and registered electronically pursuant to the Act on Electronic Registration Of Stocks, Bonds, Etc. (hereafter “Electronic Registration Act”). Meanwhile, the FIR platforms are now applying blockchain-based Distributed Ledger Technology so that the digital tokens which would be equivalent to the beneficiary security of the real estate trust can be used for transactions. In relation to fractional investment, the Financial Services Commission (FSC) recently published 2 significant legislative plans that seem to reflect such environmental change: i) the Guideline for New Securities Business Including Fractional Investment on 29 April 2022, and ii) the Maintenance Plan of Regulation System for Security Token Offering(hereafter ”STO Plan”) on 6 February 2023. According to the STO Plan, the FSC has defined the Security Token as “the digitalized security of FISCMA based on Distributed Ledger Technology”. By applying such definition criteria to the FIR, the digital tokens used in lieu of the beneficiary securities in the FIR market could be regarded as a kind of Security Token as defined under the STO Plan.

개인정보 보호법과 다른 법률 간의 정합성 연구

The consistency between the 「Personal Information Protection Act」 and other laws related to personal information is an issue. It is necessary to investigate the relationship between the 「Personal Information Protection Act」 and the Credit Information Act and between the Personal Information Protection Act and the Location Information Act. As a problem of systematic and consistent support for the protection of the rights and interests of the data subject, it is difficult to confirm the inconsistency of applicable laws and support organizations for rights relief when rights relief is necessary. It is necessary to amend the law on the subject and scope of application of the Personal Information Protection Commission, which has the general supervision of ʻpersonal information protectionʼ. It is necessary to establish a senior supervisory body to perform the role of managing and supervising all workplaces that process personal information. The hierarchical hierarchy of supervisory bodies should be rearranged, and senior supervisory bodies should be set up to separate them by sector. Supervisory body should be performed personal information protection through compliance with personal information protection principles, receipt of reports on personal information infringement notices and handling of complaints, cooperation between personal information processors and consignees, and mutual support and cooperation with the Personal Information Protection Committee. According to the revision of the Credit Information Act, similar or overlapping contents to the 「Personal Information Protection Act」 were changed to apply the 「Personal Information Protection Act」, but there are some differences in the contents of the two laws. While the Credit Information Act includes statistical and industrial research on the use of pseudonymous information, the 「Personal Information Protection Act」 has no explicit regulations, so there is a difference in interpretation. In addition, the reason for obtaining the consent of the information subject under the Credit Information Act, exceptions, and the format of the consent form are stipulated differently from the 「Personal Information Protection Act」, causing confusion. It is difficult to confirm the inconsistency of the applicable law and the organization supporting the relief of rights when remedies are applied. When personal information is leaked to credit information companies, excluding commercial enterprises and corporations, it is stipulated that the Financial Services Commission has jurisdiction. It is necessary to improve the subject and scope of application of the Personal Information Protection Committee, which has the general supervision of ʻpersonal information protectionʼ. In order to resolve the confusion in the application of personal information, the 「Personal Information Protection Act」 should be basically applied, and the Personal Information Protection Committee should perform professional and systematic supervision in each area. After deleting provisions similar to the 「Personal Information Protection Act」 in the Credit Information Act, make the 「Personal Information Protection Act」 apply as the basic law, and stipulate only the provisions requiring exceptions in the Credit Information Act.

공무원으로의 벌칙의제 규정이 문서의 ‘공문서성’을 결정할 수 있는지 여부

Recently, the Supreme Court ruled that a document issued by the governor of the Financial Supervisory Service(FSS) is considered a public document according to Articles 29 and 69(1) of the Act on the Establishment of the Financial Services Commission. Article 69 of this Act states that individuals who are not public officials are treated as public officials when it comes to applying penalties under the Criminal Code or other laws. The governor of the FSS is classified as a public official by presidential decree, thus falling under this Legal Fiction of Public Officials. Based on this regulatory framework, the Supreme Court concluded that a document issued by the governor of the FSS should be considered an official document. This interpretation is justified as it is appropriate to interpret the governor of the FSS and other employees as public officials for the purpose of imposing equal responsibilities and providing them with the same protection as public officials. However, this interpretation does not justify treating crimes against non-government employees as crimes against government employees, as it broadens the scope of the current penalty system and serves as a compensatory mechanism for excessive punishment. According to this interpretation, there are always errors of the the actor. In this case, it would be appropriate to penalize the actor for falsifying a document under Article 15(1) of the Criminal Code. Despite the lack of merit in this interpretation, it is difficult to agree that interpreting, when they provide penalties for non-public officials based on the 'type of criminal law fiction,' exceeds the limits of interpretation. The role of the judiciary is to declare what the law is, and if bad legislation exists, it is the responsibility of the legislature to correct it through new legislation. Expanding the scope of punishment for bad legislation through an interpretation that goes beyond the literal meaning of the text.

지방자치단체와 관련된 금융소비자보호법의 개선방안

A summary of improvement plans for the act on the protection of financial consumer related to local governments is as follows.
 1. Article 1(purpose) of the act on the protection of financial consumer does not contain any content related to the ‘responsibility of local governments’. Article 1 of the act on the protection of financial consumer is “this act stipulates matters to be observed regarding the business of financial product sellers and financial product advisors, and national and local governments, in order to promote the rights and interests of financial consumers and establish a sound market order in the financial product sales business and financial product advisory business. It is aimed at enhancing the effectiveness of financial consumer protection and contributing to the development of the national economy by prescribing matters related to financial consumer policies and financial dispute settlement procedures for the protection of financial consumer rights and interests of local governments.” 2. Article 9 of the act on the protection of financial consumer (responsibilities of the state) omits the responsibilities of local governments. Subparagraph 2 of article 9 of the act on the protection of financial consumer is defined as “the state and local governments shall fulfill the following responsibilities(1. establish and implement necessary policies to promote the rights and interests of financial consumers in order to realize the basic rights of financial consumers pursuant to article 7), 2. enactment, revision, and abolition of laws, ordinances, and rules related to the protection of financial consumers, 3. maintenance and improvement of operation of necessary administrative organizations, and 4. support and fostering of sound and independent organizational activities of financial consumers).” It would be nice to amend it.
 3. It would be nice to revise the ‘of the state’ in article 10, subparagraph 1 of the act on the protection of financial consumer to ‘of the state and local governments’.
 4. It would be good to amend the ‘financial services commission’ in article 29(financial consumer protection) to article 30(financial education) paragraph 4 of the act on the protection of financial consumer to ‘financial services commission and local governments’.
 5. There are no provisions related to the protection of personal information in the act on the protection of financial consumer, such as article 15, paragraph 1 of the framework act on consumers. Therefore, according to the act on the protection of financial consumer, “the state and local governments shall take necessary measures to prevent financial consumers from suffering unreasonable damage due to loss, theft, leakage, alteration, or damage of financial consumers’ personal information in transactions between financial consumers and financial product distributors, etc.” It would be good to create a new regulation similar to “.
 6. There is no such content as article 18, paragraph 1 of the framework act on consumer in the act on the protection of financial consumer. It would be good to add a new provision to the act on the protection of financial consumer, such as “financial product distributors, etc. must actively cooperate with the national and local governments' policies to promote financial consumer rights and interests”. 7. There is no such thing as ‘protection of the vulnerable’ in the act on the protection of financial consumer. It would be good if new contents such as the protection of the vulnerable class were added to the act on the protection of financial consumer.

제약·바이오 기업에 대한 연구개발비 회계처리 감독지침이 신용평점에 미치는 영향

[Purpose]Recently, the need for investor protection has increased due to growing volatility and a surge in stock prices of pharmaceutical and bio companies. Furthermore, industrial uncertainties widened owing to accounting issues such as pharmaceutical and bio companies’ recognition of development cost as asset. Under these circumstances, the Financial Services Commission and the Financial Supervisory Service released the “Supervisory Guidelines for Accounting Method of R&D Expenses in Pharmaceutical and Bio Companies” in September 2018 to resolve uncertainties and enhance transparency in their accounting.
 [Methodology]This study investigated how the market evaluates of pharmaceutical and bio companies’ recognized amount of R&D expenses through credit ratings. This study analyzed pharmaceutical and bio companies listed on Korea Stock Exchange (KSE) and the KOSDAQ market during 2016 and 2021. This study used the KIS credit score for the credit rating based on the credit rating model developed by Korea Investors Service.
 [Findings]The results are summarized as follows. The verification variable (After) and the dependent variable, the credit score variable (Score), showed a statistically significant positive (＋) value only in KOSDAQ companies. This indicates that supervisory guidelines for R&D expense accounting method of pharmaceutical and bio companies have a more significant effect on KOSDAQ companies than relatively large companies listed on Korea Stock Exchange.
 [Implications]This study is meaningful in that it empirically analyzed the effectiveness of the supervisory guidelines by examining the relationship between the guidelines and pharmaceutical and bio companies. Thus, useful information for the improvement and enactment of future accounting standards is provided by verifying the effect of the supervisory guidelines reflecting the unique characteristics of the industry.

빅테크의 보험시장 진입과 법적 과제

Insurance companies, insurance agents, and insurance planners strongly resist the announcement of the Korean Financial Services Commission(FSC)'s policy to allow Big Tech's insurance comparison and recommendation service. Big Tech's entry into the insurance market, which has a large customer base and customer information, may threaten existing insurance companies. However, the financial authorities allow entry in stages, as is currently the case. Suppose we design and apply an appropriate regulatory system for permitted business activities. If this is done, the existing insurance industry and Big Tech can coexist while growing the pie in the insurance market, contrary to the insurance industry's concerns. Ultimately, it is expected that the competitiveness and financial inclusiveness of the insurance market will be strengthened due to Big Tech's entry into the insurance market.
 The FSC stated that insurance brokerage is possible for platform operators but limited the available services to comparing and recommending insurance products that fall under the recommendation, which is step 1 of the five steps of brokerage, and linking operators. Accordingly, if the three big tech companies start the above service, it is unclear whether this corresponds to insurance brokerage and whether insurance brokerage regulations can be applied. Insurance brokerage has different characteristics from other brokerages. Even if the concept of insurance brokerage is analyzed to determine the insurance brokerage of Big Tech's insurance product comparison·recommendation services and provider connection services, it takes work to identify brokerage due to the problems inherent in the 5-step brokerage theory of the FSC. Among the two interpretation theories presented in this paper, even if it is based on the negation theory of brokerage, considering the reality of the service provided by Big Tech and the need for responsibility, the concept of insurance brokerage is widely interpreted for Big Tech, leaving room for acknowledgment of brokerage. If the requirements for appearance liability are met, Big Tech should bear brokerage liability. In the case of future regulation through revision of the law, it is a desirable direction in the legal system to include Big Tech in the insurance intermediary regulations under the Commercial Act and Insurance Business Act rather than preparing regulations in the Electronic Financial Transactions Act. Also, we need to add insurance brokerage clauses in the insurance section of the Korean Commercial Act.

국제투자협정상 공정·공평대우 규정에 대한 연구

The award of the Lone Star case was, at last, dispatched to the Parties on August 31, 2022. As the Tribunal determined that the Tribunal had jurisdiction over claims allegedly occurred after the 2011 Korea-Belgium𐄁Luxembourg BIT became effective on March 27, 2011, the key issue was allegations of misconduct by the Financial Services Commission in the sale of the Korean Exchange Bank shares to the Hana financial group. The Tribunal concluded that the Financial Services Commission acted arbitrarily as it was motivated by political reasons and, therefore, had failed to provide Fair and Equitable Treatment under the 2011 Korea-Belgium𐄁Luxembourg BIT. In order to review the Lone Star case critically, this paper firstly analyzes international arbitration cases relating to Fair and Equitable Treatment, and then examines legal implications of the Lone Star case. On top of that, this paper reviews the ways to stipulate Fair and Equitable Treatment under International Investment Agreements based on legal implications derived from the Lone Star case.

Insider trading laws to counter financial crime: a comparative study of Mauritius, UK and US laws

PurposeThe rise in business activities coupled with free trade liberalisation across countries has entailed an increase in securities transaction as well as insider trading (IT). In fact, IT is characterised by the influence and usage of some prior knowledge concerning sensitive information of a corporate body which results in a financial benefit to the insider trader. The practice of IT is not only unethical but also illegal and this statement is witnessed by the mushrooming of laws across the globe categorising IT as an offence. However, the type of punishment varies in different countries depending on various factors. Consequently, the purpose of this paper is to assess the adequacy and efficiency of IT laws in the context of a developing country being Mauritius.Design/methodology/approachTo achieve the research objective, the Mauritian laws on IT were compared with the corresponding laws of some developed countries like the USA and the UK. As such, a qualitative research method was adopted. In particular, the black letter approach was used to examine the relevant laws of Mauritius, UK and USA on IT. A comparative analysis was conducted concerning IT laws for each country with the view of suggesting recommendations for Mauritian stakeholders to adopt to enhance the existing legal and regulatory framework on IT.FindingsIt was found that Mauritian IT laws are largely inspired from both the US and UK corresponding legislation. However, Mauritian laws need to be strengthened by imposing some more severe penalties in terms of fines and terms of imprisonment like the USA has established. The Mauritian Financial Services Commission as the regulator also needs to play a more active role in disseminating particularities of IT laws, offences and penalties to the civil society at large.Originality/valueAt present, this study will be among the first academic writings on the efficiency of IT laws in Mauritius and also, because existing literature is quite scarce on assessing the adequacy of IT legislation in developing countries, this research aims at filling in the gap in literature. The study is carried out with the aim of combining a large amount of empirical, theoretical and factual information that can be of use to various stakeholders and not only to academics.

Written Statement for the House Financial Services Committee June 12, 2023 Hearing entitled "Protecting Investor Interests: Examining Environmental and Social Policy in Financial Regulation "

Written Statement for the House Financial Services Committee June 12, 2023 Hearing entitled "Protecting Investor Interests: Examining Environmental and Social Policy in Financial Regulation "

Cost Sensitivity Analysis on Merchant Discount Rates

Credit card companies provide payment services between merchants and members (i.e., cardholders) and charge merchant discount rates and annual membership fees, respectively. There is a discriminatory price structure in which merchants pay a higher commission rate than members because of the recognition that the utility of merchants is relatively greater than that of members and they have an obligation to accept cards. To prevent aggravating the burden on merchants due to the discriminatory price structure, regulations on the merchant discount rate were adopted in Korea. This study suggests a direction to improve the understanding of the credit card markets and to solve structural problems through a cost sensitivity analysis of merchant discount rates determined in the qualifying cost system introduced by the Financial Services Commission. First, we found empirical evidence that the effect of changes in each cost ratio on the merchant discount rate (price) differs depending on the intensity of the cost regulation (regulation effect). In addition, the merchant discount rate was lowered by government policy, regardless of cost. Combining the analysis results, we demonstrated that some expenses could not be recovered as merchant discount revenue when the related expenses rose due to the increase in card usage amount. To fix the structural problem of the card payment business, we suggest changing the preferential commission rates according to market conditions, reflecting eligible costs in member recruitment costs, reflecting adjustment costs in the loss rate due to the application of preferential merchant discount rates, and excluding the decrease in cost ratio due to management efficiency when the merchant discount rate is re-adjusted.

Review: The Congressional Black Caucus: Fifty Years of Fighting for Equality, by Sherice Janaye Nelson

Review: <i>The Congressional Black Caucus: Fifty Years of Fighting for Equality</i>, by Sherice Janaye Nelson

보험회사의 보험대리점 투자 관련 법적 제 문제에 관한 검토

General agencies are gaining market share within insurance sales market, based on their advantage to compare and sell different kinds of insurance products. Size of individual general agency is getting bigger, as medium-to-large sized agencies attract more sales agents and gain market share. As these agencies exert greater influence in the sales market, insurers are trying to enhance their bargaining power by acquiring stakes of general agencies or establish agency themselves as a form of subsidiary.&#x0D; In case when insurers invest in such agencies by acquiring stakes, the insurers must abide by requirements of Insurance Business Act, and the Act on the Structural Improvement of the Financial Industry, and etc. Those include restrictions of insurers acquiring stake of other companies and obtaining an approval from the Financial Services Commission. In addition, when insurers hold a general agency as their subsidiaries, the insurers should comply with the various requirements set forth in the Insurance Business Act and its subordinate regulations.&#x0D; Also, general agencies must follow relevant regulations such as the Insurance Business Act and the Financial Consumer Protection Act as the agencies themselves are insurance solicitors and financial product distribution agents or brokers.&#x0D; Penalties and sanctions can be applied to the agencies in case of violation. Particularly, the Financial Consumer Protection Act imposes strong sanctions on violation of its sales regulation, to prevent financial consumer damages from miss- selling of financial products. The Act has also introduced stronger measures to enhance effectiveness for consumer remedies.&#x0D; Therefore, reviewing those regulations details and violation effects are important when determining size and risk of the insurers’ investment to such agencies. It is necessary to ensure sound management on general agencies and protect insurance consumers by regulating governance of general agencies, such as setting up internal control standards, and etc.&#x0D; Particularly, Regulation on Supervision of Insurance Business prohibits insurers from supporting rental fees and etc. to agencies as a business standard for general agencies. The issue can be problematic as insurers provide money through stake investment. That said, it is appropriate to exempt such action from prohibition, unless stated otherwise, as capital procurement through stake acquisition is an execution of investment and do not share the same legal character of lease or borrowings.

자본시장법상 공매도(Short Sale)의 법적규제에 관한 고찰 -공매도의 잔고보고, 공시 및 위반행위자에 대한 조치 중심으로-

In spite of the information asymmetry between individual and institutional investors and the issue of fairness of the structure of securities lending and borrowing, the cases of naked short selling and covered short selling have often been observed in the securities market in Korea. Accordingly, individual investors have increasingly been dissatisfied with the securities market structure. In particular, short selling in the securities market has been dominated by institutional investors, and individuals are relatively disadvantaged in the process of securities borrowing due to credit risks and settlement management. Therefore, the securities market where the short selling takes place is criticized as a ‘unlevel playing field’ where fair game rules do not apply. Despite these problems, short selling is allowed in major countries like United States in terms of investment strategy and risk management. In Korea, naked short selling is prohibited while covered short selling is permitted, to be competible with the global standards.<BR> Under the Financial Investment Services and Capital Markets Act, it is mandated to restrict the short selling, make a report and disclosure of balance of short selling, in order to facilitate the functions of short selling such as price discovery, liquidity enhancement, etc. and reduce the risk of price declines and other dysfunctions of short selling. And the institutions in charge of regulating short selling including the Financial Services Commission, Financial Supervisory Services and Korea Exchange are implementing short selling-related measures such as quotation classification display, up-tick rules and strengthened trust management, through relevant regulations such as the Regulations on Financial Investment Business, Business Regulations of KOSPI market and KOSDAQ market. In addition, these agencies disclose short-sale investment reference materials as a precautionary measure while, as a follow-up measure, reinforcing monitoring, surveillance and investigations of violations of short selling regulations. Especially, those who violate the short selling regulations are imposed of administrative fines or member fines of the Korea Exchange. The ongoing increase in the violation of short selling despite the tightening of regulations on short selling is believed to be due to the low level of sanctions against the offenders and insufficient regulatory system. Moreover, in relation to the breach of short sale, it depends on sanctions after the fact rather prior prevention. Therefore, it is important to establish a dedicated system for securities lending and borrowing that allows investors to be aware of short selling before submitting a sell order. However, the current order system cannot prevent intentional unfair trading orders to avoid short selling regulations because investors can enter their short-selling orders on their own discretion. In addition, financial investment companies who intermediate orders can check the balance of individual investors’ sales accounts, but it is difficult to check the balance of sales accounts of institutional investors and foreign investors who usually deposit their securities in custodian banks. As such, there is always likelihood that the naked short selling will occur because institutional investors can submit short-selling orders without holding securities. Moreover, even in the case of borrowing securities from the borrowing and lending brokerage firms, it is impossible to confirm whether the borrowing contract is duly established or to check the authenticity of the borrowing contract. Therefore, in order to eliminate discrimination and distrust among investors and to promote fair market and reasonable price formation, it is necessary to minimize the problems associated with the systems of balance-check and disclosure of short-selling, surveillance and investigation of unfair trades, etc.

REFLECTIONS ON MONETARY POLICY AND ITS FUTURE

[...]I should say that there was no greater single authority who impacted our policy deliberations when I served as chairman of the House Financial Services Committee than John Taylor. [...]the balance sheet can certainly be injurious to future taxpayers, and it is one more way that the Fed's independence could be compromised. [...]when the 2008 financial crisis occurred, the Fed asked for the power to pay interest on excess reserves. The CBO can't foresee a year in the next decade where the national debt won't rise faster than national income, which is a frightening prospect. [...]the Fed has a massive balance sheet with the assets it has bought, and it has borrowed the money from commercial banks to pay for those assets.

The Korean Wave as a source of implicit cultural policy: Making of a neoliberal subjectivity in a Korean style

The Korean Wave provides an effective vehicle for implicit cultural policies concerning the formation of a neoliberal subjectivity of young-generation South Koreans. By looking at two web dramas casting K-pop idols (commissioned by the Financial Services Commission and by Samsung) and a pop idol audition programme, we offer a detailed understanding of the prevailing discourse of youth in contemporary Korea and how this is naturalised across the boundaries of policy, business, media and fandom. The implicit cultural policy formulates a desirable self in a ‘Korean style’ by highlighting some of the psychological qualities of post-industrial creative workers and exploring Korean society’s existing inventory of the productive ethic and Confucian ideals. The juxtaposition of post-industrial and industrial ethics, and the tension between entrepreneurial self and collective self, impose a double burden on youth, leaving them little scope to contest the pervasive ‘desirable selfhood’.

Republic of Korea

Oversight of the Korean financial system is broadly effective. Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have in place regulatory and supervisory regimes in line with international standards with only a few remaining gaps. The authorities have addressed most of the recommendations of the previous FSAP and made good progress in benchmarking their frameworks with the Basel Core Principles (BCP), the Insurance Core Principles (ICP) and the International Organization of Securities Commissions (IOSCO) Objectives and Principles for Securities Supervision (IOP).

Testimony before the House Financial Services Committee; Hearing on 'Examining Corporate Priorities: The Impact of Stock Buybacks on Workers, Communities, and Investors'

In this testimony I discuss the causes and consequences of the rise of stock buybacks. Stock buybacks may sound like a technical matter of corporate finance: Why should it matter whether or not corporations repurchase their own stock? When a company executes a stock buyback, they raise the price of that company’s shares for a period of time, but the funds spent on buybacks are then unavailable to be spent on the types of corporate activities that could make the company more productive over the long term: investments in future productivity and in the workforce. Stock buybacks are one of the drivers of our imbalanced economy, in which corporate profits and shareholder payments continue to grow while wages for typical workers stay flat. Stock buybacks are virtually unregulated, even though Congress has recognized their potential for market manipulation. Importantly, there are currently no meaningful limits to stop executives from using corporate money on stock buybacks to raise share prices for their own short-term gain. Executives are not required to disclose that they have conducted a buyback until the next quarter’s filing; meanwhile, there are no substantive limits to stop them from selling their own personal shares in the same quarter as they are conducting buybacks.

Material weakness disclosures and restatements: value of external auditor attestation

PurposeThe purpose of this study is to examine the value of auditor attestation in internal control over financial reporting (ICFR) disclosures. The authors argue that internal control material weakness (ICMW) disclosures issued without auditor attestation by non-accelerated filers provide weaker signal to the impaired financial reporting quality compared to those issued with auditor attestation by accelerated filers.Design/methodology/approachThis study investigates the differences in the association between ICMW disclosures and impaired financial reporting quality, as proxied by financial statement restatements, for accelerated and non-accelerated filers. The authors use propensity score matching to find control groups for both accelerated and non-accelerated filers.FindingsThe authors find that ICMW disclosures signal impaired financial reporting quality for both accelerated and non-accelerated filers, but such signaling is weaker for non-accelerated filers compared to accelerated filers.Research limitations/implicationsAlthough propensity score matching was used to match firms with and without ICMW disclosures, any unobservable fundamental differences between these groups may affect the results of this study.Originality/valueThis study shows that auditors’ involvement in the assessment of internal control effectiveness improves the signaling effect of ICMW disclosures on impaired financial reporting quality. As approved by the House Financial Services (HFS) Committee on November 4, 2009, non-accelerated filers are permanently exempt from auditor attestation requirement. This study provides some evidence that the exemption of non-accelerated filers from auditor attestation may have unintended consequences, and these results should be of interest to regulators and investors.

Application of Influential Measures by the National Financial Services Commission to Violators of Legislation on Financial Services

Application of Influential Measures by the National Financial Services Commission to Violators of Legislation on Financial Services