A "stock parking" allegation has been raised against Democratic Party of Korea candidate Ha Jung-woo, who is running in the Busan Buk-gap National Assembly by-election, with claims that Ha dumped a large block of shares in the artificial intelligence (AI) startup Upstage at a bargain price. Ha's camp countered that this was "a far-fetched claim that shows no understanding of the startup ecosystem."
Hong Jong-gi, managing attorney at the law firm Daham, said on the 19th on Facebook that "candidate Ha, on Aug. 11 last year, right after being appointed Blue House senior secretary for AI future planning, sold 4,444 shares of Upstage that he held to an individual for just 100 won per share." Law firm Daham is where independent candidate Han Dong-hoon, who is running in the same district, is affiliated.
He continued, "That same month, Upstage issued preferred shares at 293,956 won per share, and its common shares are now trading around 70,000 won per share on the over-the-counter market," adding, "Ha transferred shares of a promising AI company to someone for 0.13% or less of the market price."
Hong also said, "Anyone with common sense would have a strong reason to suspect that, while in public office, the shares were temporarily parked with someone to retrieve after leaving office," adding, "What's more serious is that on Aug. 4 last year, when Ha was drawing up AI policy and overseeing the independent AI foundation model project, Upstage benefited by being selected as a participating company."
Ha's camp issued a statement the same day, saying, "In the startup ecosystem, employees and founders' share ownership typically follows vesting conditions." Vesting refers to a structure in which rights are confirmed sequentially when certain conditions are met.
Ha's camp said, "At the time of Upstage's founding in 2021, Ha signed a vesting agreement of 'three-year cliff, three-year installment,' and, in line with his appointment as senior AI secretary and the original agreement, sold the remaining 4,444 shares to the company at par value," adding, "Leaping to a nominee ownership suspicion over the stock sale process is nothing more than a baseless claim that shows no understanding of the startup's basic investment structure and ecosystem mechanisms such as stock options."
In response to Hong's allegation, candidate Han Dong-hoon said, "Let's first hear Ha's explanation," and after Ha's camp pushed back, said, "It has only become clearer that this is a serious conflict of interest."