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Photo = Financial Services Commission |
[Alpha Biz= Kim Jisun] A senior executive at a KOSDAQ-listed company has been caught using material non-public information to generate illicit profits and failing to disclose stock ownership, prompting financial authorities to refer the case to prosecutors.
The Financial Services Commission’s Securities and Futures Commission announced on March 25 that it had approved measures to file a criminal complaint against the individual at its sixth regular meeting.
The executive, identified only as “A,” served in an investor relations (IR) role and used undisclosed positive information—such as approval related to an immune cell therapy developed by a subsidiary—to purchase shares of the company. The trades were executed via contracts for difference (CFDs) and standard transactions using accounts under another person’s name. The individual is estimated to have gained approximately KRW 550 million in illicit profits.
In addition, A failed to fulfill mandatory reporting obligations despite acquiring and disposing of company shares after being appointed as an executive.
Under the Capital Markets Act, insiders—including major shareholders, CEOs, and employees—are prohibited from trading or tipping others based on material non-public information obtained through their duties. Violations may result in criminal penalties of at least one year in prison or fines of up to six times the illicit gains.
If borrowed-name accounts are used for unfair trading purposes, offenders may also face penalties under the Financial Real Name Act, including up to five years in prison or fines of up to KRW 50 million.
Furthermore, executives or major shareholders are required to report any changes in their shareholdings within five days of the transaction. Failure to comply may result in penalties of up to one year in prison or fines of up to KRW 30 million.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
