Financial authorities notified investigative agencies about an IR executive who bought shares using nonpublic inside information, including phase 1 clinical results for a new drug under development and a new drug technology transfer contract, to obtain unjust profits.
The Securities and Futures Commission under the Financial Services Commission said at its 15th regular meeting on the 2nd that it notified investigative agencies of a KOSDAQ-listed company executive on suspicion of using nonpublic material information under the Financial Investment Services and Capital Markets Act, after the executive obtained unjust profits by using favorable inside information and failed to report share ownership status.
Executive B, the IR officer employed at KOSDAQ-listed company A, used information on the key results of phase 1 clinical trials for a new drug under development and the conclusion of a new drug technology transfer contract to purchase A's shares through an account in another person's name from March to June 2024. It was later confirmed that about 20 million won in unjust profits was obtained. B also showed an obligation to report share ownership status.
The Financial Investment Services and Capital Markets Act prohibits insiders from using nonpublic material information acquired in connection with the business of a listed company for trading specific securities or other transactions, or from allowing others to use it.
In addition, if insiders such as the largest shareholder, the representative director, and executives and employees of a listed company use undisclosed material information learned in the course of their duties for a transaction or allow others to use it, they may face criminal penalties for violating the Financial Investment Services and Capital Markets Act, including imprisonment of at least one year or a fine of up to six times the unjust gains. A penalty surcharge of up to twice the amount of unjust gains may also be imposed.
An executive or major shareholder of a listed company must report to the Financial Supervisory Service, within five days from the date of becoming an executive or major shareholder, the company shares owned for their own account regardless of whose name they are held in, and, if there is a change in ownership status, the details within five days from the date of change. Failure to do so may result in criminal penalties for violating the Financial Investment Services and Capital Markets Act, including imprisonment of up to one year or a fine of up to 30 million won.