The Financial Supervisory Service (FSS) announced on the 4th that it plans to take strict measures as unfair trading involving executives and employees of listed companies continues to occur.
According to the FSS, a total of 145 individuals among executives and employees of listed companies have been subject to measures for unfair trading over the past three years. The number increased from 30 in 2021 to 73 in 2022, and 42 were detected up to September last year.
A major case of unfair trading involving executives and employees of listed companies is the use of undisclosed information. An executive responsible for management support tasks at listed company A came across information during an internal meeting that company B, also listed, was acquiring management rights. Considering the improvement in financial stability due to the change of the largest shareholder and the possibility of synergy, the executive anticipated a rise in stock price after disclosure and purchased company B’s shares intensively before the information was made public, thereby obtaining unfair profits. The FSS took action against the executive for violating the prohibition on the use of material non-public information.
Other violations detected include the use of undisclosed information based on adverse information, unfair trading such as distributing false press releases, market manipulation to defend against stock price declines, and violations of ownership reporting obligations to conceal short-term trading profits.
An FSS official explained, "As unfair trading involving executives and employees of listed companies has been continuously detected, we have been conducting on-site education since July 2018, which was temporarily suspended during 2020-2021 due to COVID-19 but resumed last year. We will provide customized education focusing on frequently occurring violations such as the use of undisclosed information and acquisition of short-term trading profits, and introduce recent detection cases to raise awareness among executives and employees."
He added, "Based on demand surveys conducted through the Listed Companies Association and the KOSDAQ Association, we plan to have FSS investigation department staff visit and provide education directly to 13 companies that requested on-site training between October and November this year. For executives and employees of listed companies with few training applicants, we will also hold briefing sessions in the form of group education in Seoul and major provincial cities."
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