It was recently revealed that the financial authorities notified the prosecution at the end of last year regarding former Wemade Chief Executive Officer Jang Hyun-guk for alleged insider information leakage. The allegation states that Jang disclosed Wemade's stock dividend plan during a personal meeting in 2021, and a friend who heard this made a profit by trading stocks.
According to the financial authorities on the 19th, the Financial Services Commission presented a 'sanctions proposal for violations of the prohibition on using undisclosed information regarding Wemade stocks' at the Securities and Futures Commission meeting held on Dec. 18 last year, and notified the investigation agency about former CEO Jang and his college acquaintance A. This agenda was reportedly raised by the Financial Supervisory Service.
The financial authorities determined that former CEO Jang attended a golf meeting on Aug. 27, 2021, while serving as CEO of Wemade, where he allegedly leaked the stock dividend plan. His college acquaintance A purchased 168,000 shares of Wemade stock through five accounts of his relatives, friends, and acquaintances in the morning of the 30th, three days later, and sold most of them the next day. Wemade announced its decision for a stock dividend allocating one new share for each existing share after the market closed that day. In other words, A bought Wemade stocks in bulk on the morning of the stock dividend announcement and sold them after the announcement to obtain a price difference profit.
Typically, a stock dividend acts as a positive factor for stock prices. As retained earnings are transferred to capital, shares are distributed free of charge to existing shareholders, making it an effective method to temporarily boost stock prices.
It has been reported that A met former CEO Jang at a meeting, but he claims to have never heard any undisclosed information. However, the financial authorities decided to notify the prosecution based on the substantial amount traded by A, who leveraged through a Contract for Difference (CFD) account, which accounted for 7% of Wemade's trading share on that day, as well as the fact that A's trading pattern was different from usual.
A representative of the Securities and Futures Commission noted, "The circumstantial evidence showed that we notified the prosecution to take a look at it," adding that "it is a lighter measure than a formal complaint."
Separately, former CEO Jang has been indicted for falsely disclosing the circulation of the virtual asset "WEMIX" last August. Currently, he is working as the CEO of the game company Action Square, having left Wemade.