Insufficient Evidence 'No Charges'
Last February, ShillaJen Shareholders Alliance
Submitted Complaint Claiming "Leak Before Delisting Decision Announcement"
Conclusion After 5 Months
[Asia Economy Reporter Oh Gyumin] The police have decided not to prosecute Son Byeongdu, Chairman of the Korea Exchange, and employees who were accused of leaking information related to the delisting decision of SillaJen.
The Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency decided on May 16 not to prosecute Chairman Son and employee A of the Korea Exchange, who were accused of violating the Capital Markets and Financial Investment Services Act (use of undisclosed important information), due to insufficient evidence.
In February, the SillaJen Shareholders' Union filed a complaint against them at Yeongdeungpo Police Station. The small shareholders of SillaJen claimed in the complaint, "Employees of the Korea Exchange leaked information about the progress and details of the Corporate Evaluation Committee meeting before the announcement of the delisting decision, allowing unidentified institutional investors to sell a large volume of M2N shares," and "the M2N stock price plunged more than 11 percentage points intraday due to massive sales by institutional investors."
They suspected that information was leaked before the Korea Exchange KOSDAQ Market Headquarters held the Corporate Evaluation Committee and announced the delisting decision of SillaJen. This suspicion arose because the stock price of M2N, the largest shareholder, plummeted during the committee's proceedings.
Additionally, on the day of the Corporate Evaluation Committee, it was reported that institutions net sold 1.85 million shares of M2N, the largest shareholder of SillaJen. This began four hours before the delisting decision was publicly announced.
On the other hand, the Korea Exchange argued that since the Corporate Evaluation Committee was composed of eight external members except for one person in charge of delisting at the exchange, it was impossible for information to have been leaked before the committee concluded.
SillaJen's trading was suspended in May 2020 after allegations of embezzlement and breach of trust against former CEO Moon Eunsang arose, which constituted grounds for a substantive review of listing eligibility. Subsequently, the exchange granted a one-year improvement period through the Corporate Evaluation Committee but decided to delist in January. However, the KOSDAQ Market Committee of the exchange re-granted the improvement period, so trading is currently only suspended.
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