An executive of a listed company who made an illicit profit in the 500 million won range by trading shares after learning in advance about approval information for an immune cell therapy was reported to the prosecution.
The Securities and Futures Commission of the Financial Services Commission said on the 25th at its sixth regular meeting that it reported to the prosecution a former IR executive of KOSDAQ-listed Company A on suspicion of violating the Financial Investment Services and Capital Markets Act for obtaining unjust profits by using undisclosed, favorable, material information.
According to the financial authorities, the executive, identified as B, learned in advance through internal information that a subsidiary's immune cell therapy had received approval to treat a specific disease, and from October to November 2022 used accounts under others' names to buy shares of Company A via contracts for difference (CFDs) and ordinary trades. It was found that this yielded an unjust profit of about 550 million won.
B also failed to fulfill a reporting obligation on holdings that arose after being appointed as an executive in Mar. 2021 while conducting stock transactions through accounts in the person's own name and in others' names.
Under the current Financial Investment Services and Capital Markets Act, if an insider such as an employee or officer of a listed company conducts a transaction using undisclosed, material information learned in the course of duties, or allows another person to use it, the person may face imprisonment for at least one year or a fine of up to six times the unjust profit.
In addition, if a borrowed-name account is used for the purpose of unfair trading, the person may be punished for violating the Real Name Financial Transactions Act with imprisonment of up to five years or a fine of up to 50 million won.
The financial authorities said, "We will continue to keep a close watch on unfair trading, and by thoroughly investigating detected illegal acts and taking stern action, we will do our utmost to establish order in capital market transactions."