[Alpha Biz= Kim Jisun] The Financial Services Commission’s Securities and Futures Commission (SFC) announced that it has decided to file criminal complaints and refer 24 individuals to investigative authorities for illegally profiting from the use of undisclosed material information.

According to the SFC, the decision was made at its third regular meeting held on February 4, targeting individuals who obtained unfair gains by trading on non-public information.

First, three individuals, including a disclosure agent and the head of an investor relations (IR) consulting firm, were reported to authorities for exploiting positive insider information. Investigations revealed that Mr. A, CEO of a disclosure agency, became aware of favorable undisclosed information regarding Companies B and C while providing disclosure services and earned approximately KRW 100 million in illegal profits.
Mr. D, who received the information from Mr. A, generated around KRW 200 million in illicit gains and paid Mr. A approximately KRW 30 million in exchange for the information. Similarly, Mr. E, CEO of an IR consulting firm, earned several tens of millions of won across four transactions by using positive undisclosed material information obtained while handling disclosure and IR services for Company F.

The SFC also referred Mr. H, the largest shareholder and executive decision-maker of listed Company G, for avoiding losses using negative insider information. Mr. H learned through internal financial reporting that the company would post operating losses. Prior to public disclosure, he sold shares of Company G held by himself and an affiliated entity, Company I, generating illegal profits totaling KRW 3.2 billion.

In addition, four individuals, including employees of a pharmaceutical company, were referred for profiting from insider information related to drug development. Mr. K, an employee of pharmaceutical Company J, acquired undisclosed information on a COVID-19 treatment while working at the company’s research institute. Before the information became public, he and his spouse, Ms. L, purchased Company J shares and earned approximately KRW 70 million. Ms. L subsequently shared the information with acquaintances Ms. M and Mr. N, who jointly invested and generated profits of approximately KRW 147 million.

The SFC further decided to file complaints or make referrals against 16 individuals, including executives and employees of listed companies, who profited from advance knowledge of rights offerings, as well as a former employee of a listed company who used such information to trade shares of another company in the same industry.

Executives and employees Q, R, S, and T of listed Company O, along with former employee Mr. U of listed Company P, learned in advance that Company P would participate in a rights offering by Company O and that Company O would acquire a large stake in Company P. Using this information, they purchased shares of Company O through family members and acquaintances, generating illegal profits totaling KRW 4.34 billion.
In particular, Mr. U passed the insider information to family members to avoid detection, while personally purchasing shares of another listed company in the same industry—expected to benefit from the disclosure—earning approximately KRW 40 million.

 

 

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