Prosecutors have launched a full-fledged investigation into Meritz Fire & Marine Insurance employees suspected of raking in hundreds of millions of won in trading profits by using information on the Meritz Financial Group merger.
On the 9th, according to financial industry and according to legal sources, the Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Lim Se-jin) conducted searches and seizures the previous day at the Seoul Gangnam office of Vice Chairman and CEO Kim Yong-beom of Meritz Financial and at the Yeouido headquarters of Meritz Securities.
Meritz Fire & Marine Insurance employees are suspected of obtaining related information before Meritz Financial announced its merger plan in Nov. 2022, buying shares, and then selling them after the stock price surged, pocketing hundreds of millions of won in illicit gains.
The main targets of the investigation are former Meritz Fire & Marine Insurance President Lee Beom-jin and former Meritz Fire & Marine Insurance Executive Director Eun Sang-young. They are said to have bought shares using even family accounts before the merger plan was announced. At the time of the case, former President Lee was executive vice president in charge of corporate insurance, and Vice Chairman Kim Yong-beom was the CEO of Meritz Fire & Marine Insurance.
In Nov. 2022, Meritz Financial announced it would make Meritz Fire & Marine Insurance and Meritz Securities wholly owned subsidiaries to integrate its governance structure. Meritz Financial pursued a comprehensive stock exchange by transferring subsidiary shares to the holding company and issuing holding company shares to distribute to subsidiary shareholders. The launch of the integrated holding company was completed in 2023 as Meritz Fire & Marine Insurance and Meritz Securities were delisted.
On Nov. 22, 2022, the day after the integrated holding company launch plan was announced, Meritz Financial's share price closed at 34,750 won, up 29.91% from the previous trading day. On Apr. 25, 2023, when the integration process was completed, Meritz Financial's share price stood at 45,600 won, up 70.46% from the announcement.
The Securities and Futures Commission of the Financial Services Commission filed a complaint with prosecutors in July last year against former President Lee and former Executive Director Eun on suspicion of violating the Financial Investment Services and Capital Markets Act. Three Meritz Fire & Marine Insurance employees who bought shares using nonpublic information were referred to prosecutors. Meritz Fire & Marine Insurance says the nonpublic information case is unrelated to Vice Chairman Kim Yong-beom.