The Joint Response Team, established by the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange to eradicate stock price manipulation, identified a group that secured over 20 billion won in illicit gains by exploiting information related to listed companies' corporate governance restructuring, such as tender offers, and mergers and acquisitions (M&A). Investigations revealed that these individuals formed connections through elite university business clubs and global consulting firms, subsequently establishing a type of 'information cartel' to share insider information from listed companies.
The Joint Response Team announced on the 29th that it had identified a case involving suspected use of undisclosed M&A-related information by so-called 'financial elites,' including individuals from global consulting firms and private equity fund management companies, and conducted searches and seizures at approximately 20 locations, including the suspects' workplaces and residences.
The suspects are charged with securing over 20 billion won in illicit gains by purchasing specific stocks before positive undisclosed information, such as tender offers or M&A deals, was released to the market, and then selling them at high prices after the stock price rose following the information disclosure.
The suspects formed connections by participating together in elite university business clubs and global consulting firms. They subsequently moved to private equity fund management companies and listed corporations, taking on roles involving M&A-related operations such as tender offers. Investigations revealed that they continuously and repeatedly shared information on numerous stocks learned during their work over the past approximately five years. Key suspects are also charged with passing related information to family members and acquaintances, effectively creating a type of information cartel.
A source from the Joint Response Team stated, "This was not a one-time deviation by an individual, but rather long-term repeated information sharing within a close-knit information cartel, where professionals bearing confidentiality obligations while performing M&A-related duties served as the source of the information." The source added, "The case is very serious because the information spread to family members and acquaintances, leading to a widespread increase in unfair trade actors."
Information regarding listed companies' corporate governance restructuring, such as tender offers, or M&A deals constitutes representative positive material information that significantly impacts stock prices immediately upon disclosure. The Capital Markets Act strictly prohibits using such information for trading before it is disclosed to general investors, or allowing others to use it.
To prevent the concealment of illicit gains, the Joint Response Team also imposed payment suspension measures on the accounts of some suspects.
In this case, the Korea Exchange initially detected the suspicion during market surveillance, after which the Joint Response Team further confirmed the suspicions through coordinated investigations among institutional investors. The Joint Response Team plans to swiftly conclude its investigation based on the search and seizure results and take strict measures.
A source from the Joint Response Team stated, "We will make every effort for follow-up measures, including filing criminal complaints and imposing surcharges of up to twice the amount of illicit gains."
in STOCK
