Financial Services Commission Refers Numerous Stock Traders for 'Undisclosed Information Misuse'

A large number of individuals who gained unfair profits or avoided losses by trading stocks using undisclosed material information have been referred to the prosecution.

On September 16, the Financial Services Commission resolved at its regular meeting to file criminal complaints and notifications with the prosecution against five employees and executives of Company A, a company preparing a tender offer, and its affiliate Company B, for using undisclosed material information.

According to the commission, from June 2024 to June of last year, these individuals used undisclosed information related to the tender offer to trade Company B's shares, or delivered this information to 11 first-tier recipients, including family members and acquaintances, generating illicit gains totaling several hundred million won. Among them, two executives from Company B also violated their obligation to report the status of their Company B stock holdings.

It has been reported that five second-tier information recipients earned 90 million won after receiving the information. Fines were imposed on these individuals.

The commission also referred the CEO of Company C, a specialized new technology business finance company, to the prosecution. The investigation found that he became aware of negative undisclosed information—a rights issue allocated to shareholders for a stock in which a managed fund had invested—and preemptively sold the fund's shares before the public disclosure, thus avoiding tens of billions of won in losses.

Two financial investors in listed Company D have also been referred. They learned about the signing of a share transfer agreement while pursuing the acquisition of shares and management rights in a listed company, passed this information to two acquaintances for use in stock trading, and, having learned in advance that the agreement would be canceled, sold their holdings to avoid losses amounting to several hundred million won.

The agent of a major acquirer who had agreed to purchase shares and management rights of manufacturing Company E has also been reported and notified to the prosecution. The investigation found that, knowing undisclosed information related to a share transfer agreement, he traded Company E's shares through a borrowed-name account and delivered the information to two relatives, earning several hundred million won.

An official from the commission stated, "We will continue to take strict action against unfair trading that utilizes undisclosed material information."

This content was produced with the assistance of AI translation services.