The financial authorities identified allegations that Inside Men obtained improper gains by using undisclosed information and notified the Serious Crime Investigation Agency.
On the 28th, the Securities and Futures Commission (hereinafter SFC) held its 19th regular meeting and referred to the Serious Crime Investigation Agency the participants in a large-scale rights offering (paid-in capital increase) and their acquaintances, who were charged with using information regarding a third-party designated rights offering that involved a change of control.
According to the SFC, executives of listed company E and its affiliates, as well as their acquaintances, acquired and received material non-public information related to a rights offering involving a change of control at listed company A through their duties. They used and transmitted this material non-public information, expecting that the participation of a celebrity in the large-scale paid-in capital increase, the change of control resulting from the third-party rights offering, and improvements in financial condition would significantly boost the stock price. They are suspected of obtaining 1.25 billion won in improper gains through these actions.
The authorities also identified another instance of using material non-public information, in which an inside director of a corporation that agreed to acquire control of a listed company passed undisclosed information to an acquaintance, resulting in improper gains.
An inside director of Corporation J, which agreed to acquire control of listed company I through a stock transfer agreement and a rights offering, passed undisclosed information regarding the control acquisition contract to an acquaintance, enabling them to use it for trading shares of Company I. The acquaintance is suspected of trading shares of Company I and passing the undisclosed information to three relatives, thereby obtaining improper gains worth 100 million won.
The three relatives, who were secondary recipients of the information, are also suspected of disrupting market order by using the undisclosed information to obtain improper gains worth 100 million won.
In addition to company executives and employees, individuals who have signed or are negotiating contracts with a company may face criminal penalties, including imprisonment for a term of one year or more or fines, under the Capital Markets Act if they use material non-public information learned in connection with their duties or allow others to use it.
If a primary recipient of information receives undisclosed information and uses it for trading, they may also be subject to surcharges of up to 1.5 times the amount of improper gains under the Capital Markets Act as 'information-utilization market order disruption.'
A financial authority official stated, "We will respond firmly to unfair trading in the capital markets that utilizes undisclosed information," and urged, "Please take all necessary measures to prevent unfair trading by complying with relevant regulations and strengthening internal controls."
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