Former and current employees of NH Investment & Securities who gained more than 300 million won in unfair profits by using undisclosed, material information learned during a tender offer assignment have been referred to prosecutors.
The Securities and Futures Commission under the Financial Services Commission said on the 21st that it held a regular meeting and resolved to file a complaint and impose a penalty surcharge on former and current employees of NH Investment & Securities for acts including using undisclosed information on a tender offer. At the meeting, the Securities and Futures Commission (SFC) also referred to prosecutors a case involving price rigging by the largest shareholder of a listed company.
Employee A at NH Investment & Securities obtained undisclosed information on the implementation of tender offers for three listed companies in the course of work, used it to buy shares, and passed the information to former NH Investment & Securities employee B to use. The two were found to have obtained a total of 370 million won in unfair gains.
The Securities and Futures Commission (SFC) filed a complaint with prosecutors against them for violating the ban on using undisclosed, material information under the Financial Investment Services and Capital Markets Act. It also imposed a total of 3.7 billion won in penalty surcharges on six second- and third-tier information recipients who received the information from B and gained about 2.9 billion won in unfair profits for market order–disrupting acts.
NH Investment & Securities said it plans to respond faithfully in accordance with laws and procedures. A representative of NH Investment & Securities said, "We have strengthened companywide internal controls by banning executives from trading stock and requiring family account disclosures," adding, "We will continue to review and reinforce our compliance and ethics systems."
Also, three people, including the controlling shareholder of a listed company who engaged in price rigging to defend against a stock price drop on the same day, were referred to prosecutors for violating the ban on market manipulation under the Capital Markets Act.
C, the de facto owner of an unlisted company that is the largest shareholder of the listed company, faced a situation in which collateral shares would be force-sold if the listed company's stock price fell, and ordered an employee of the listed company to submit a total of 2,152 price-rigging orders for 298,447 shares to defend against the price drop.
C was found to have raised about 20 billion won in borrowing fund with 70%–80% of the listed company's shares as collateral. The unfair gains obtained through price rigging amount to 29.4 billion won.
A Financial Services Commission (FSC) official said, "We plan to actively cooperate with the prosecution's investigation to ensure the allegations are thoroughly uncovered," adding, "We will keep a close watch on unfair trading acts, thoroughly investigate detected violations, and take stern action to ensure the establishment of sound capital market transaction practices."