South Korea’s Financial Services Commission reported that the Securities and Futures Commission approved criminal complaints and referrals to the Serious Crimes Investigation Agency on Nov. 11 over suspected insider trading involving undisclosed bonus share issue information. The action concerns a venture investment firm’s chief executive, a listed investee company and that company’s finance executive.
The venture investment firm’s chief executive effectively controlled two listed investee companies and served as a de facto executive of the company planning the bonus share issue. He allegedly instructed the other company’s finance executive to buy the issuer’s shares through a corporate account before disclosure, generating several billion KRW in illicit gains. The finance executive allegedly also used the information to trade through a personal account, earning tens of millions of KRW.
Insiders who trade on undisclosed material information or enable others to do so can face imprisonment of at least one year or fines of up to six times illicit gains. Companies may also face criminal penalties where the results of an insider’s conduct are attributable to them.