The Securities and Futures Commission Refers 22 Individuals and 4 Corporations to Prosecutors for Unfair Trading Cases

[Asia Economy Reporter Eunmo Koo] The Securities and Futures Commission (SFC) under the Financial Services Commission announced on the 1st that it has reported and notified the prosecution of 22 individuals, including CEOs, and 4 corporations regarding 7 cases of unfair trading in the third quarter of this year.

In the cases reported and notified to the prosecution by the SFC, repeated characteristics such as illegal acts using undisclosed information, market manipulation by artificially manipulating the stock prices of listed companies through large-scale funds and multiple accounts, and fraudulent trading were found. For example, in cases of violation of the prohibition on using undisclosed information, a CEO and an executive of a listed company who learned during the approval process of quarterly reports that the company would turn to a deficit used that information to trade stocks through an account under the name of an unlisted company controlled by the CEO.

Regarding market manipulation, there were cases where a major shareholder, after acquiring a company with no capital, used accounts under other people's names to submit closing price-related orders intensively during the stock market's closing time to artificially defend against stock price declines, preventing the forced sale of stocks provided as collateral due to the price drop.

In relation to fraudulent trading, a case was detected where the largest shareholder and CEO, in order to prevent the stock price decline of shares held and sell them at a high price, did not disclose to investors the special agreement with convertible bondholders that negatively affected the company's issued stock price, and sold his shares after the stock price surged following the announcement of a return to profitability.

The SFC stated, "We will swiftly and strictly sanction and take measures against unfair stock trading cases to eradicate unfair trading in the capital market," adding, "In particular, we plan to strengthen the investigation system and improve necessary systems to suppress unfair trading in line with recent trends such as the organization of unfair trading activities, and take various measures to prevent recurrence."

The SFC reviews and resolves cases of unfair trading in the capital market investigated by the Financial Services Commission and the Financial Supervisory Service, and discloses cases and characteristics quarterly.