REGULATIONS ON INVESTMENT PROFESSIONALS AND QUALIFYING EXAMINATIONS Formulated on November 18, 2008. Amended on January 23, 2009. Amended on February 26, 2009. Amended on March 24, 2009. Amended on July 10, 2009. Whole Regulations Amended on December 1, 2009. Amended on March 26, 2010. - 1 -
PART I GENERAL PROVISIONS 1 1. Purpose The purpose of these Regulations on Investment Professionals and Qualifying Examinations (hereinafter referred to as the Regulations ) is to prescribe the matters necessary for the Korea Financial Investment Association (hereinafter referred to as the Association ) to implement the registration and management of experts, qualifying examinations and administration of educations for experts under [ 286(1)3] of the Financial Services and Capital Markets Act (hereinafter referred to as the Act ), [ 307] of the Enforcement Decree of the Act (hereinafter referred to as the Enforcement Decree ) and [ 8 1] of the Regulations on Financial Investment Businesses. 1 2. Definitions (1) The terms used in these Regulations shall be defined as follows: 1. The term financial investment company refers to a company which carries on a financial business under [ 6(1)] of the Act with a license from, or a registration with, the Financial Services Commission. 2. The term investment professional is defined as an expert who is an executive or employee of a financial investment company registered with and managed by the Association. 3. The term investment solicitation means the act of making a recommendation to a specific investor to make a contract for trading financial investment instruments, for investment advisory, for discretionary investment, or for trusts (excluding a management trust contract and a trust contract with no investment risk). 4. The term investment advisory is defined as an act of accepting advice on the value of financial investment products or related judgments (referring to judgments over class, item, acquisition, disposition, methods of acquisition or disposition, quantity, price, time, etc.). - 3 -
5. The term investors refers to the professional investors specified in [ 9(5)] and ordinary investors in [ 9(6)] of the Act. 6. The term mandatory qualifying examination refers to an examination that investment professionals shall pass in order to register with the Association. 7. The term voluntary qualifying examination refers to a non mandatory examination administered by the Association for the professional development of financial investment business employees. 8. The term self administered education refers to the pre registration and/or continuing education programs voluntarily administered by financial investment companies for their experts. 9. The term fund related company resources refers to the professional resources required by a general administration company under [ 254], collective investment scheme appraisal company under [ 258] and bond assessment company under [ 263] of the Act to register with the Financial Services Commission. (2) Definitions of other terms used in these Regulations shall comply with those of related legislations including the Act, the Enforcement Decree and the Regulations on Financial Investment Businesses. 1 3. Type of Investment Professionals Investment professionals shall be categorized as follows: 1. Investment Advisory Professional (hereinafter referred to as the Certified Investment Advisor : a person who provides investment solicitation or investment advisory services to investors. The Certified Investment Advisors are classified as follows based on the type of investment products they deal with: a. Certified Investment Advisor Class 1 (hereinafter referred to as the Certified Fund Investment Advisor ): a person who provides investment solicitation or advisory services to investors on investment securities of - 4 -
collective investment schemes (hereinafter referred to as funds ). b. Certified Investment Advisor Class 2 (hereinafter referred to as the Certified Securities Investment Advisor ): a person who provides investment solicitation or advisory services to investors on securities (excluding funds and derivative linked securities pursuant to derivatives, etc. in [ 46 2] of the Act), or who provides the investment solicitation service on short term funds in accordance with [ 7(2)4] of the Enforcement Decree. c. Certified Investment Advisor Class 3 (hereinafter referred to as the Certified Derivatives Investment Advisor ): a person who provides investment solicitation or advisory services to investors on derivatives and derivative linked securities. 2. Investment Advisory Management Professional (hereinafter referred to as the Certified Investment Advisors Manager ): a person who manages and supervises the services of investment advisors and/or introducing brokers in the branch office or other local offices of financial investment companies. 3. Investment Management Professional (hereinafter referred to as the Certified Investment Manager ): a person who manages collective investments, trust investments, or discretionary investments. 4. Research Analysis Professional (hereinafter referred to as the Certified Research Analyst ): a person who prepares data including opinions or predictions on the value of a specific investment product (hereinafter referred to as the research analysis data ) and/or carries out the review and approval thereof in a financial investment company licensed in investment trading or brokerage. 5. Risk Management Professional: a person who systematically integrates and manages financial risks, etc. by measuring, assessing and controlling the risks with certain methods in the risk management organization provided in [ 3 43(2)] of the Regulations on Financial Investment Businesses. 1 4. Registration Requirements for Investment Professionals A person who intends to register as an investment professional shall meet the following requirements: - 5 -
1. Certified Fund Investment Advisor: a candidate shall pass the qualifying examination prescribed in [ 3 1] Subparagraph 1 of these Regulations and complete the pre registration education for Certified Fund Investment Advisors administered by the Association (however, a person who only provides fund investment advisory service as the registered investment advisory business and satisfies the requirements in Item a. of Subparagraph 5 shall be deemed qualified for registration and able to provide the registered service only). 2. Certified Securities Investment Advisor: a candidate shall pass the qualifying examination prescribed in [ 3 1] Subparagraph 2 of these Regulations and complete the pre registration education for Certified Securities Investment Advisors administered by the Association (however, a person who only provides any of the following services and satisfies the relevant requirements shall be deemed qualified for the registration and able to provide the registered service only among the following:). a. Investment solicitation service for professional investors on securities: a person who has more than one (1) year job experience in a financial investment company. b. Investment advisory service on securities as the registered investment advisory business: a person who satisfies the requirements provided in Item a. of Subparagraph 5. c. Investment solicitation service of a concurrent financial investment business entity on debt securities: a person who completed the preregistration education for debt securities investment solicitation service. 3. Certified Derivatives Investment Advisor: a candidate shall pass the qualifying examination prescribed in [ 3 1] Subparagraph 3 and complete the pre registration education for Certified Derivatives Investment Advisors administered by the Association (however, a person who only provides any of the following services and satisfies the relevant requirements shall be deemed eligible for registration and able to provide the registered service only among the following:). a. Derivatives investment solicitation for professional investors: a person who has more than one (1) year job experience in a financial investment company. - 6 -
b. Derivatives investment advisory service as registered investment advisory business: a person who satisfies the requirements under Item a. of Subparagraph 5. 4. Certified Investment Advisors Manager: a candidate shall, among the exams prescribed in [ 3 1] Subparagraphs 1 through 3, pass all relevant qualifying examinations concerning the investment products for which he/she can provide the investment solicitation service in the branch office or any other local offices of a financial investment company with relevant business license (however, if the business of the branch office or other local offices is limited to the provisos or services under Subparagraphs 1 through 3, the relevant requirements shall be satisfied). 5. Certified Investment Manager: a candidate shall meet any of the following requirements according to the type of assets to be managed. a. Management of financial product investments: a person who passed the examination prescribed in [ 3 1] Subparagraph 4 and completed the pre registration education for financial investment product management service administered by the Association, or who comes under the securities investment manager category specified under Item d. of Subparagraph 1 in Annexed Table 2 of the Regulations on Financial Investment Businesses. b. Management of real estate investments: a person who falls under the real estate investment manager category specified under Item d. of Subparagraph 1 in Annexed Table 2 of the Regulations on Financial Investment Businesses. c. Management of social infrastructure investments: a person who falls under the social infrastructure investment manager category specified under Subparagraph 1 in Annexed Table 13 of the Regulations on Financial Investment Businesses. 6. Certified Research Analyst: a candidate who falls under any of the following: a. A person who passed the qualifying examination prescribed in [ 3 1] Subparagraph 5. b. A person who has more than one (1) year experience in research - 7 -
analysis data preparation and/or in assisting research analysis data preparation in a financial investment company. c. A person who has a master s or upper level degree in securities related fields including business administration and economics and more than two (2) years of research experience in a financial research institution recognized by the chairman of the Self regulation Committee. d. A person who completed education programs in a financial investment education institution recognized by the chairman of the Self regulation Committee. 7. Risk Management Professional: a person who has engaged in the risk management related business in a risk management organization under [ 3 43(2)] of the Regulations on Financial Investment Businesses. 1 5. Duty of Investment Professionals (1) All investment professionals shall protect investors by conducting their businesses according to the principles of good faith. (2) All investment professionals shall comply with the code of ethics and standards of conduct for investment professionals. (3) All investment professionals shall complete the continuing education administered by the Association to maintain their professionalism. PART II MANAGEMENT OF INVESTMENT PROFESSIONALS CHAPTER I REGISTRATION AND CANCELLATION OF REGISTRATION OF INVESTMENT PROFESSIONALS 2 1. Application for Registration (1) When a financial investment company intends to have an executive or employee carry out the business of a Certified Fund Investment Advisor, it shall - 8 -
submit an application to the Association for registration. However, the submission of the documents prescribed in Subparagraphs 4 and 5 below shall be limited to an initial application for registration to the Association. 1. One (1) completed application form for investment professional registration <Annexed Paper 1>; 2. One (1) copy of an ID card (only limited to resident card, driver s license, passport, or resident alien card); 3. One (1) half card sized photo (an electronic image in the same size is acceptable); 4. One (1) certificate of career (limited to career based applications); and 5. Other documents deemed necessary by the chairman of the Self regulation Committee. (2) When a financial investment company intends to have its executive or employee carry out the business of a Certified Fund Investment Advisor, it shall apply to the Association for registration with the following documents: 1. One (1) completed application form for Certified Fund Investment Advisor registration <Annexed Paper 2>; and 2. One (1) written confirmation of sales experience (limited to an initial career based application for registration). <Annexed Paper 3> (3) In the case of a Certified Investment Manager registration application, the following documents shall be submitted in addition to the documents prescribed in Paragraph (1). 1. One (1) certificate of investment management experience (limited to registration applications based on investment management career) <Annexed Paper 4>; and 2. One (1) written confirmation of disciplinary records or the existence of the disciplinary records. <Annexed Paper 5> - 9 -
(4) When financial investment companies apply for the registration of investment professionals, the Association may impose a fee for the issuance of certificates. In this case, different fees may be imposed on financial investment companies that are not members of the Association. (5) The necessary details for the fee charges under Paragraph (3) shall be provided by the chairman of the Self regulation Committee. 2 2. Evaluation for Registration (1) When an application for registration of investment professional is submitted in accordance with [ 2 1], the Association shall evaluate each of the following factors: 1. Whether or not the candidate satisfies the registration requirements prescribed in [ 1 4]; 2. Whether or not all the entry items of the application form or required documents are complete; and 3. Other factors deemed necessary by the chairman of the Self regulation Committee. (2) If any omissions and/or flaws are found in the required documents during the evaluation prescribed in Paragraph (1), the Association may request that the relevant financial investment company supplement the documents. (3) If no flaws are found during the evaluation under Paragraph (1), the Association shall approve the registration of the candidate and list him/her in the Roster of Registered Investment Professionals provided in Annexed Paper 6. 2 3. Rejection of Registration The Association may reject the registration of a candidate who falls under any of the following. However, Subparagraph 8 shall be limited to the rejection of a Certified Investment Manager. 1. A person who are not an executive or employee of a financial investment - 10 -
company; 2. A person who is a registered investment professional of a financial investment company other than the company applying for the registration; 3. A person who does not satisfy the requirements under [ 1 4]; 4. A person who is determined ineligible as a result of the evaluation under [ 2 2(1)]; 5. A person whose suspension period of registration validity under [ 2 11] has not passed; 6. A person whose period of the restriction on qualifying exam application and/or rejection of registration under [ 2 11(3)] and [ 2 13(1)] has not passed; 7. A person who is deemed unacceptable by the registration requirements due to the submission of false documents, etc.; or 8. When the candidate has a job experience in other institution than the financial investment company which filed for the application and a record of disciplinary action taken by the institution regarding his/her business, the following periods shall not pass from the date of the disciplinary action taken: a. A one (1) month pay reduction: 1 year b. A two (2) month pay reduction: 2 years c. A three (3) month or longer period pay reduction (including suspension from office and disciplinary dismissal): 3 years. 2 4. Validity of Registration (1) Any executives or employees of financial investment companies shall be able to carry out their investment businesses by registering with the Association as an investment professional. However, a registered investment professional whose registration validity is suspended by the Association under [ 2 11] shall not be able to provide the registered business service during the period of suspension. - 11 -
(2) The services of an investment professional shall be limited to the business services for which his/her relevant investment company is licensed under the Act. (3) No financial investment company shall allow any of their registered professionals who have not passed the period of registration suspension imposed by the Association or persons who have not registered with the Association to carry out the businesses of investment professionals. 2 5. Cancellation of Registration The Association may cancel the registration of an investment professional in any of the following cases: 1. When the investment professional has retired from financial investment company, etc.; 2. When the relevant financial investment company has dissolved or suspended its business; or 3. When the cancellation of registration of the investment professional is requested by financial investment company, etc. 2 6. Notice & Announcement of Registration (1) The Association shall give notice to relevant financial investment company in any of the following cases: 1. Registration under [ 2 2(3)]; 2. Rejection of registration under [ 2 3]; 3. Cancellation of registration under [ 2 5]; or 4. Disqualification and/or suspension of registration validity under [ 2 11] (2) The Association may implement an online inquiry system on its website for investors to check whether or not an executive or employee of financial investment companies is a registered investment professional. - 12 -
CHAPTER II MANAGEMENT AND SUPERVISION OF INVESTMENT PROFESSIONALS 2 7. Management and Supervision of the Association (1) The Association shall efficiently manage and supervise investment professionals. (2) The Association shall prepare and maintain the Roster of Registered Investment Professionals and other necessary documents for investment professional management. The Roster and documents may be substituted by electronic documents. (3) The Association may, when deemed necessary for the management and supervision of investment professionals, investigate the management of investment professionals and the administration of financial investment companies and/or the overall business practice and regulatory compliance of investment professionals. 2 8. Management and Supervision of Financial Investment Companies (1) All financial investment companies shall be thorough in their management and supervision of investment professionals to maintain the fair business orders in the securities and derivatives markets and protect investors. (2) All financial investment companies shall prepare and maintain the Roster of Registered Investment Professionals prescribed in Annexed Paper 7 for the management of investment professionals, and the Roster may be substituted by electronic data. 2 9. Issuance of Registration Certificates (1) The Association shall deliver the Certificate of Registration prescribed in Annexed Paper 10 to the registered investment professionals via their financial investment companies. (2) A Certificate of Registration pursuant to Paragraph (1) shall include: - 13 -
1. Registration number and date; 2. Name of the financial investment company; 3. Personal information; and 4. Permitted services or scope of investment products 2 10. Reporting of Registration Change, Dismissal and Disciplinary Action (1) When the registration information has changed, the relevant financial investment company shall, without delay, report to the Association pursuant to the Change Report of Investment Professional Registration Information prescribed in Annexed Paper 8, electronically or by other methods. (2) When an investment professional has been dismissed or retired, the relevant financial investment company shall report the fact to the Association pursuant to the Dismissal Report of Investment Professional prescribed in Annexed Paper 9, within ten (10) business days after the date of dismissal or retirement. (3) When any disciplinary action is taken against investment professionals or employees other than investment professionals, the relevant financial investment company shall report the details of the disciplinary action to the Association pursuant to [ 2 69] and [ 2 74] of the Regulations on Business Conducts and Services of Financial Investment Companies. (4) When any financial investment company fails to make the deadline for reporting under Paragraphs (2) and (3) above, it shall submit a written statement of reasons for the delay to the Association. 2 11. Sanctions on Investment Professionals (1) When an investment professional has involved in any of the following unfair misconduct, the Self regulation Committee may impose disqualification (referring to the revocation of any or all qualifications acquired through exams; the same shall apply hereafter in these Regulations), suspension of registration validity or other necessary measures against the professional. The Committee may also notify and request that the relevant financial investment company reprimand the offender - 14 -
according to its internal regulations. 1. When any investment professional has violated the Act, the Enforcement Decree, the Enforcement Regulations of the Act, any other provisions and orders pursuant to the same legislations, or regulations of the Association (including rules, conventions and voluntary resolutions equivalent to regulations) with regard to his/her business service; 2. When any investment professional has committed a criminal act such as embezzlement, misappropriation, theft or bribery regarding his/her business service; 3. When any investment professional has hired a person who is not an investment professional to attract investors or to entrust the trade ordering of investment products; 4. When any investment professional has registered the accounts managed by other investment professionals, executives and/or employees who are not registered investment professionals as his/her own management accounts in an irregular manner to conceal his/her acceptance of high rate fees or other unfair misconduct, or has registered his/her own accounts as the accounts managed by other investment professionals or persons other than registered investment professionals in an irregular manner to conceal his/her acceptance of high rate fees or other misconduct; 5. When any investment professional has ordered, conspired, or condoned the unfair misconduct of other investment professionals or employees who are not registered investment professionals; 6. When any investment professional has refused, obstructed or avoided an investigation of the Association; 7. When any investment professional has failed to complete the continuing education provided in Chapter I, Part V without justifiable reasons; 8. When any investment professional has given false information with regard to the registration application under [ 2 1]; - 15 -
9. When any investment professional has committed a dishonest act during the qualifying examination administered by the Association; or 10. When any Certified Securities Investment Advisor has failed to record and maintain the reasons or basis for his/her recommendation to an ordinary investor to buy a specific stock in the consultation journal. (2) The disqualification or revocation of registration validity under Paragraph (1) shall be limited to cases where the relevant professional is the doer, commander, co conspirator or otherwise actively involved person in the alleged offence. (3) In the case of the disqualification of an investment professional, the Self regulation Committee may restrict the violator from applying for any qualifying exams and cancel the registration validity of any other credentials he/she may hold. In the case of revocation of registration validity, the Self regulation Committee may refuse to register the offender as a certified investment professional. (4) When any disciplinary action is imposed against investment professionals by the Self regulation Committee, the type of action and period of registration rejection shall comply with the Disciplinary Action Criteria for Investment Professionals in Annexed Table 1. (5) Notwithstanding Paragraph (4), when any disciplinary measure taken by a financial investment company against its investment professionals is deemed substantially unfair compared with the sanctions of other investment companies for a similar misconduct, the Self regulation Committee may impose its own sanction on the offender through a resolution, regardless of the action taken by the relevant investment company. (6) The period of restriction on exam applications, suspension on registration validity or rejection of registration under Paragraph (3) shall start from the date when the Self regulation Committee cancelled the relevant professional s success in the exam or suspended the validity of the professional s registration. (7) The Self regulation Committee may increase, decrease or exempt sanctions against any violators in following cases: - 16 -
1. When the violator has involved in multiple acts of misconduct; 2. When the violator has repeated the same misconduct; 3. When the relevant misconduct is serious enough to significantly disturb fair business orders in the securities and derivatives markets; or 4. Other cases when the consideration of mitigating factors is deemed necessary. (8) When any investment professional is involved in any of the misconduct specified in Paragraph (1) with a charge of lack of oversight, following or simple support for the violation, the Self regulation Committee may notify the relevant investment company of the misconduct and request for a sanction on the violator. 2 12. Sanctions on Financial Investment Companies (1) If any financial investment company violates the provisions of this Part, neglects the implementation thereof or the management and supervision of investment professionals, the Self regulation Committee may suspend any new registration of investment professionals by the relevant company for up to six (6) months and impose an additional fee penalty as deemed necessary. (2) The suspension of any new investment professional registration by the relevant financial investment company under Paragraph (1) may be imposed independently according to the type of investment professionals. (3) The specific standards for any sanctions imposed against financial investment companies by the Self regulation Committee under Paragraph (1) shall comply with the Disciplinary Action Criteria for Financial Investment Companies in Annexed Table 2. (4) If the efforts of the relevant investment company to prevent any misconduct by its registered investment professionals are recognized, the Self regulation Committee may shorten the suspension period of new investment professional registration by the relevant investment company. (5) The sanctions under Paragraph (1) shall be imposed within three (3) months - 17 -
after the end of a business year of the relevant investment company. 2 13. Restriction on Exam Application of Investment Professionals (1) If any executives and/or employees of financial investment companies are sanctioned with reason for disqualification or revocation of registration validity specified in Annexed Table 1 Disciplinary Action Criteria for Investment Professionals regarding any of the acts of misconduct prescribed in [ 2 11(1)], the Self regulation Committee may restrict the exam application of the violator or refuse his/her registration as a certified investment professional for a prescribed period based on the same Criteria. If the violator has satisfied the registration requirements prescribed in [ 1 4], he/she may be disqualified under [ 2 11]. The period of restriction on exam application or rejection of registration shall start from the date when the success in examination was cancelled or the application restriction or registration rejection measure was determined. (2) The restriction on exam application, rejection of registration or disqualification under Paragraph (1) shall also apply to a person who has retired from the relevant investment company at the time of the action by Self regulation Committee. (3) The restriction on exam application, rejection of registration or disqualification pursuant to Paragraphs (1) and (2) shall comply with the provisions in [ 2 11(2)]. (4) When any executive or person other than registered investment professionals has neglected the management and supervision of investment professionals or has involved in misconduct as an investment professionals, the Self regulation Committee may notify the relevant investment company of the misconduct and request the violator be reprimand. 2 14. Electronic Submission of Application Documents, etc. The Association may accept the electronic submission of application documents, etc. pursuant to this Part via the online registration system on its website according to the procedures set forth by KOFIA. All investment companies shall be able to check the results of their electronically submitted applications via the same online registration system. - 18 -
CHAPTER III REGISTRATION AND MANAGEMENT OF FUND RELATED COMPANY RESOURCES 2 15. Type of Fund Related Company Resources (1) Fund related company s resources shall be classified as follows: 1. Certified Collective Investment Property Calculator (hereinafter referred to as the fund administrator ): a person who carries out the calculation of collective investment properties under [ 184(6)] of the Act in a general administration company specified in [ 254] of the same Act. 2. Certified Collective Investment Scheme Appraiser (hereinafter referred to as the fund appraiser ): a person who carries out the appraisal of collective investment schemes in a collective investment scheme appraisal company under [ 258] of the Act. 3. Certified Collective Investment Property Appraiser (hereinafter referred to as the bond appraiser ): a person who carries out the appraisal and analysis of collective investment properties under [ 285(3)] of the Enforcement Decree in a bond appraisal company specified in [ 263] of the Act. (2) The examination administered by the Association to verify the competence as a Certified Investment Analyst in [ 285(3)1] of the Enforcement Decree shall refer to the examination specified in [ 3 1] Subparagraph 5 of these Regulations. 2 16. Registration Requirements for Fund Related Company Resources A person who intends to register as a fund related company resource shall meet the following requirements based on the service type: 1. Fund Administrator: a person who has at least two (2) years job experience in the valuation of assets including securities or the custody and/or the analysis of collective investment properties in any of the institutions prescribed in [ 276(3)] Subparagraphs 1 through 4 of the Enforcement Decree. - 19 -
2. Fund Appraiser: a person who has at lest two (2) years job experience in the appraisal and analysis of securities and collective investment schemes or corporate financial affairs (pursuant to [ 71] Subparagraph 3 of the Act) in any of the institutions prescribed in [ 276(3)] Subparagraphs 1 through 3 of the Enforcement Decree or a collective investment scheme appraisal company. 3. Bond Appraiser : a person who fall under any of the following: a. A person who passed the examination specified in [ 3 1] Subparagraph 5. b. A person who has at least one (1) year experience in bond appraisal and analysis in any of the institutions specified in [ 276(3)] Subparagraphs 1 through 3 of the Enforcement Decree or a bond appraisal company. 2 17. Registration of Fund Related Company Resources, etc. The registration and management of the fund related company resources shall comply with the provisions under [ 2 1] through [ 2 10] and [ 2 14] of these Regulations. PART III MANDATORY QUALIFYING EXAMINATIONS CHAPTER I EXAM CLASSIFICATION AND APPLICATION REQUIREMENTS 3 1. Type of Mandatory Qualifying Examinations The mandatory qualifying examinations shall be categorized as follows: 1. Examination for Certified Fund Investment Advisors; 2. Examination for Certified Securities Investment Advisors; 3. Examination for Certified Derivatives Investment Advisors; - 20 -
4. Examination for Certified Investment Managers; and 5. Examination for Certified Research Analysts. 3 2. Restriction on Application (1) A person who falls under the following cases shall not apply for any of the examinations under [ 3 1]: 1. A person who passed one of the examinations prescribed in [ 3 1] and intends to apply for the same examination (however, this provision shall not apply to the re application under [ 3 11(2)] ); 2. A person whose application for exams is restricted under [ 2 11] and/or [ 2 13]; or 3. A person whose application for exams is restricted under [ 3 19(1)]. (2) A person who is not an executive and/or employee of financial investment companies or who does not fall under any of the Items in [ 56] Subparagraph 1 of the Enforcement Decree shall not apply for the examination specified in [ 3 1] Subparagraph 1. A person who intends to register with the Association as the certified investment professional specified in Item a. of [ 1 3] Subparagraph 1 within five (5) years of passing the exam may apply for the examination, but his/her success in the exam shall be cancelled if not registered within the five (5) years. (3) A person who falls under any of the following shall not apply for the examination set forth in [ 3 1] Subparagraph 4: 1. A person who falls under [ 24] Subparagraphs 1 through 8 of the Act (excluding the minors in Subparagraph 1 of the same Article of the same Act); or 2. A person who has been requested by a regulator to be sanctioned with pay reduction or more severe penalty or sanctioned by his/her relevant financial institution with pay reduction or more severe penalty within the recent three (3) years from the date of the examination. - 21 -
(4) In the case of a successful candidate who falls under the preceding Paragraphs (1) through (3), the Association may cancel his/her success in the examination. (5) In the case of examination application of a person who falls under Paragraphs (1) through (3), the provisions in [ 3 19(1)] of these Regulations shall apply. CHAPTER II ADMINISTRATION OF QUALIFYING EXAMINATIONS, ETC 3 3. Establishment of Professional Resources Committee The Self regulation Committee shall establish the Professional Resources Committee (hereinafter referred to as the Committee ) for the fair administration of qualifying examinations. 3 4. Composition of the Committee (1) The Committee shall consist of the following members and the chairman of the Committee (hereinafter referred to as the Chairman ) shall be elected by mutual vote of the Committee members from among persons set forth in Subparagraphs 3 through 6. 1. KOFIA s General Manager of examinations; 2. Two (2) executives and/or employees of financial investment companies (excluding concurrent financial investment companies) recommended by the chairman of the Association; 3. One (1) person recommended by the chairman of the Securities & Futures Commission; 4. One (1) person recommended by the governor of the Financial Supervisory Service; 5. One (1) person recommended by the president of the Korea Capital Market Institute; - 22 -
6. One (1) person recommended by the president of the Korea Consumer Agency under [ 33] of the Framework Act on Consumers; and 7. One (1) respective executive or employee of both banks and insurance companies recommended by the president of the Korea Banking Institute and the president of the Korea Insurance Institute. (2) The Chairman shall represent the Committee and preside over the Committee meetings. When the Chairman becomes incapable of action due to inevitable reasons, one of the members specified in the preceding Paragraph (1) shall act for the Chairman upon designation of the Chairman. (3) The term of office for the Chairman and Committee members shall be renewable two (2) years. In the case of a member vacancy, the term of office for a new member shall be the remaining term of his/her predecessor. (4) The KOFIA s General Manager of Examinations shall be the secretary of the Committee operations. 3 5. Items for Committee Discussion and Resolution (1) The Association shall put each of the following matters to the discussion and resolution of the Committee: 1. Matters on the determination and change of examination date; 2. Matters on the determination of examination difficulty; 3. Matters on the composition of exam question developers and selectors; 4. Matters on dishonest actors during exams; 5. Matters on the treatment of the exam questions to which applicants filed objections; 6. Matters on the approval of self administered education institutes; 7. Major issues regarding the implementation of the pre registration and/or - 23 -
continuing education programs; and 8. Other matters regarding the implementation of exams including examination fee. (2) When intending to change any provisions in Parts III through V, the Association shall seek the Committee opinion in advance and report the results of the amendment to the Self regulation Committee. 3 6. Convocation of Committee Meetings and Resolution Method (1) The Chairman of the Committee shall call a Committee meeting whenever requested by a majority of the Committee members or the Chairman himself. (2) The quorum for opening a meeting shall be a majority of the registered Committee members, and any decisions of the meeting shall be approved by a majority of the members present. In the case of a tie vote, the decision shall be made by the Chairman. (3) When any resolution item of the Committee is deemed urgent or simple, the Association may decide on the matter in writing. 3 7. Content Areas of Examinations, etc. The content areas and score points distribution based on the type of examinations are provided in Annexed Tables 3 1 through 3 5. 3 8. Method of Examinations (1) Every examination shall be a single round testing comprised of multiplechoice or essay questions. (2) The Association may set different testing methods for different types of examinations considering the nature of examinations. 3 9. Development of Exam Questions, etc. (1) The examination questions shall be developed by persons appointed by the - 24 -
Association pursuant to [ 3 7] (hereinafter referred to as the developing commissioners ) for each subject category and selected by persons commissioned by the Association (hereinafter referred to as the selecting commissioners ). In this case, any person shall not be allowed to hold the offices of developing and selecting commissioners at the same time. (2) The Association may appoint separate developing commissioners, selecting commissioners and marking commissioners for each subcategory of the content areas specified in [ 3 7] to maintain the professionalism in the development, selection and marking of exam questions. (3) The essay type questions shall be marked by persons appointed by the Association for each subject category specified under [ 3 7] (hereinafter referred to as the marking commissioners ). In this case, a developing or selecting commissioner shall be allowed to hold the office of marking commissioner at the same time. 3 10. Duties of Development, Selection and Marking Commissioners (1) Every question development, selection and marking commissioner shall submit a completed pledge form of Annexed Table 5 to the Association. (2) Every question development, selection and marking commissioner shall faithfully implement the precautions for developing and selecting exam questions required by the Association and the compliance requirements in the written pledge. 3 11. Determination of Successful Candidates (1) Any correct answer sheet in regard to the selection of successful candidates shall not be disclosed, and the criteria for the successful candidate selection are provided in Annexed Table 6. (2) When any successful candidate has not registered as a certified investment professional or introducing broker within five (5) years from the date when he/she passed the qualifying exam or his/her registration was cancelled, the validity of the candidate s success in the exam shall be nullified and the candidate shall retake the examination in order to register as a certified - 25 -
investment professional or introducing broker. (3) Notwithstanding Paragraph (2), the validity of any candidate s success in qualifying examination shall not be nullified in the following cases: 1. When the candidate has proved that he/she had worked for a financial investment company for a consecutive time period including the whole or part of the years specified in Paragraph (2); or 2. When the candidate has proved that he/she had worked for a financial investment company for a period including the whole or part of the years specified in Paragraph (2) and has not passed five (5) years after retiring from the company (in this case, the date when the candidate retired from the company is regarded as the date when his/her registration was cancelled). (4) The procedures for proving the job experience in a financial investment company under Paragraphs (3) and (4) above shall be provided by the chairman of the Self regulation Committee. 3 12. Announcement of Successful Candidates When successful candidates are finalized, the Association shall make a public announcement of the successful candidates without delay in a method prescribed by the chairman of the Self regulation Committee. 3 13. Management of Successful Candidates (1) Every successful candidate shall be given a certificate by the Association. In this case, the public notification of the successful candidates may substitute the certificates. (2) The Association shall record and maintain the list of successful candidates on paper, electronic or microfilm media. 3 14. Disclosure of Examination Plans (1) The Association shall disclose next year s examination plans until the end of - 26 -
December every year. When the Association plans to implement an additional examination, the notification of the additional exam shall be made at least thirty (30) days before the scheduled date of the exam. (2) The examination plans mentioned in the preceding Paragraph (1) shall include: 1. Matters on applicant qualifications; 2. Matters on date, time and venue of examination; 3. Matters on content areas and score points distribution; 4. Matters on application form and registration; 5. Matters on successful candidate determination; and 6. Other matters on the implementation of examination. (3) regarding any changes in the content of the disclosure under Paragraph (1), the changes and their reasons shall be made public at least fifteen (15) days prior to the scheduled date of the exam. (4) The method of the disclosures under Paragraphs (1) and (3) shall be provided by the chairman of the Self regulation Committee. 3 15. Committee Operation Expenses, etc. (1) The Association may give fixed allowances or administration expenses to persons involved in the implementation of exams including the Committee members, question development, selection and marking commissioners, examiners and other assisting test administration staff. (2) The Association shall report any matters regarding revenues and expenses in association with the examinations to the Committee. - 27 -
CHAPTER III ADMINISTRATION OF EXAMINATION 3 16. Compliance Requirements for Applicants Every applicant who has registered their examination application shall meet the compliance requirements for applicants in Annexed Table 7. 3 17. Oversight of Examinations (1) The Association shall deploy at least two (2) examiners per one (1) examination area for the fair administration of examinations. (2) All examiners shall be allowed to take any necessary measures against applicants for the fair and efficient implementation of examinations. 3 18. Collection of Test Materials The examiners shall collect all examination materials including answer sheets and questions sheets when the examination is over. 3 19. Measures against Dishonest Acts (1) When a test taker has committed any of the dishonest acts specified in Annexed Table 6 or interfered with the administration of examination, the relevant examination may be cancelled and the relevant test taker s application for the exams specified in [ 3 1] and [ 4 1(1)] may be restricted for up to three (3) years from the date of the event. (2) When any candidate has passed an examination by dishonest means or submitted false documents, the Association may cancel the relevant candidate s success in the examination. In this case, the provisions in Paragraph (1) shall apply. (3) When the candidate who committed a dishonest act under Paragraphs (1) and (2) is the executive or employee of a member institution, the Association may recommend the relevant investment company impose a sanction on the dishonest candidate according to its Articles of Association. - 28 -
3 20. Objections (1) Any test taker may file an objection with regard to exam questions, etc. within one (1) week after the examination is over according to the procedures provided by the chairman of the Self regulation Committee. (2) When any objection is filed under Paragraph (1), the Association shall hold a meeting of question development and selection commissioners to process the objection in a fair manner. (3) When deemed necessary as a result of the meeting specified in Paragraph (2), the objection may be submitted to the Committee for discussion. PART IV VOLUNTARY QUALIFYING EXAMINATIONS 4 1. Type of Voluntary Qualifying Examinations, etc. (1) The voluntary qualifying examinations are classified as follows: 1. Examination for Certified Financial Risk Manager; and 2. Examination for Certified Investment Analyst. (2) The applicant requirements by exam type are as follows: 1. Examination for Certified Financial Risk Managers: none 2. Examination for Certified Investment Analysts: a person who passed the examination specified in [ 3 1] Subparagraph 5. (3) A person who falls under any of the Subparagraphs in [ 3 1(1)] shall not apply for voluntary qualifying examinations. 4 2. Method of Voluntary Qualifying Examinations (1) The content areas and score points distribution of the voluntary exams based on type are provided in Annexed Tables 4 1 and 4 2. - 29 -
(2) All voluntary qualifying exams shall be a single round testing. The questions of the examination for Certified Financial Risk Managers shall be multiple choice while those for Certified Investment Analysts shall be essay type. (3) The Committee may set different testing methods for different types of examinations considering the nature of the examinations. 4 3. Administration of Voluntary Qualifying Examinations Other matters on the administration and management of the voluntary qualifying exams shall comply with the provisions in Part III. However, the provisions in [ 3 11] Paragraphs (2) through (4) shall not apply. PART V EDUCATION CHAPTER I PRE REGISTRATION AND CONTINUING EDUCATION 5 1. Target of Education (1) The target of the pre registration education is any person who intends to register with the Association as a certified investment professional. (2) The target of the continuing education is any person who has registered with the Association as a certified investment professional. 5 2. Method of Education (1) The pre registration and/or continuing education may be provided in a collective or online education format. (2) The pre registration and/or continuing education under Paragraph (1) shall be deemed completed if any of the following requirements are met: 1. Collective education: more than 80% in attendance rate; or - 30 -
2. Online education: 100% in progress rate. (3) The pre registration education is only required for initial registration, and any person who has more than one (1) year job experience in a financial investment company (excluding persons who intend to register as a Certified Fund Investment Advisor) shall be deemed to have completed the pre registration education. (4) Every investment professional shall take a specific set of the continuing education programs administered by the Association at least once (1) every two (2) years. In this case, the year of registration as a certified investment professional shall be included in the two (2) years. (5) Notwithstanding Paragraph (4), the investment professional specified in [ 1 3] Subparagraph 2 shall complete the relevant continuing education more than once (1) every year. In this case, the investment professional shall be exempt from the continuing education for the year of his/her registration with the Association. (6) The necessary details of the pre registration and/or continuing education including content areas and time requirements, etc. shall be provided by the chairman of the Self regulation Committee. 5 3. Sales Training Institutions (1) The pre registration and/or continuing education for Certified Fund Investment Advisors shall be provided by the following institutions based on business types: 1. Financial Investment Institute of the Association; 2. Korea Banking Institute; or 3. Korea Insurance Institute. (2) When any of the institutions specified in Subparagraphs 2 and 3 of Paragraph (1) (hereinafter referred to as the sales training institutions ) has formulated or revised the regulations on the pre registration and/or continuing education for Certified Fund Investment Advisors, it shall report to the Committee without delay. The Association may review the institution s - 31 -