A screen shows, from left, the KOSPI, the won-dollar exchange rate and the Kosdaq at the dealing room of KEB Hana Bank's headquarters in Seoul, Wednesday. Yonhap

The extent of embezzlement and breaches of trust by executives and employees of companies listed on the KOSPI and Kosdaq markets has totaled nearly 5 trillion won ($3.7 billion) over the past six years. The average trading suspension period for these companies is now approaching the 500-day mark.

According to data from Korea Exchange, released by Rep. Kim Hyun-jung of the main opposition Democratic Party of Korea on Thursday, a total of 4.62 trillion won in embezzlements and breach of trust occurred in the benchmark KOSPI market and the secondary bourse Kosdaq from 2019 to August this year.

Among these, KOSPI-listed companies disclosed a total of 53 cases, amounting to 1.86 trillion won. The cases were more frequent in the Kosdaq, as 111 cases amounting to 2.76 trillion won were disclosed during the same period.

Looking at this year alone, six cases totaling 50.7 billion won were disclosed in the KOSPI market, including 20.1 billion won from Namyang Dairy Products, one of Korea's largest dairy companies.

In the Kosdaq market, 12 cases totaling 103.6 billion won were disclosed, including the 41.7 billion won from Terra Science, a technology company focused on core parts materials.

The problem is that listed companies with cases of embezzlement and breach of trust may face trading suspensions and the possibility of being delisted, which can cause stock price crashes and investor losses.

So far, 19 KOSPI-listed companies and 103 Kosdaq-listed firms have had their trading suspended due to such cases. Among the Kosdaq-listed ones, 37 were eventually delisted.

The average trading suspension period was 498.1 days for KOSPI-listed companies and 470.4 days for Kosdaq-listed ones.

Critics said cases of embezzlement and breach of trust that undermine trust in the nation's capital markets are repeated as the recommended sentencing for such crimes is excessively lenient.

"To restore confidence in the capital markets and protect investors, a stronger internal monitoring system is needed," Kim said. "The accountability of external auditors must also be reinforced."