Financial Supervisory Service Begins Investigation into Gu Yeon-gyeong, LG Welfare Foundation CEO, over Fraudulent Transactions

Suspicion of Insider Information Use
Summoning of Kosdaq Listed Company Officials

The Financial Supervisory Service (FSS) has launched an investigation into Koo Yeon-kyung, CEO of LG Welfare Foundation, on suspicion of using undisclosed information. Koo is the eldest daughter of the late Koo Bon-moo, former chairman of LG Group. It is reported that the FSS first summoned related parties and completed the investigation.

According to the financial investment industry on the 17th, the FSS recently summoned Mr. A, a non-executive director (registered executive) of a KOSDAQ-listed company. The matter is related to Koo’s acquisition of shares in company M.

In April last year, company B raised 50 billion KRW through a third-party allotment of paid-in capital from BlueRun Ventures (BRV) Capital Management. The stock price of company M surged from around 16,000 KRW per share at the end of March last year to as high as 50,000 KRW after the news of the capital increase was announced.

Koo is reported to have personally acquired 30,000 shares of company M. Koo’s husband, Mr. Yoon Kwan, is the Chief Investment Officer (CIO) of BRV Capital Management. This has raised suspicions of insider trading.

Mr. A, the registered executive of company M summoned by the FSS, was originally the vice president of the venture investment firm BlueRun Ventures (BRV) Korea Advisors. BRV Korea Advisors is the domestic subsidiary of BRV Capital Management. After BRV Capital Management made an investment in company B last year, Mr. A was appointed as a registered executive through the shareholders’ meeting in March this year.

Meanwhile, Article 174 of the Capital Markets Act prohibits the use of undisclosed material information related to the business of a listed company for trading or dealing in specific securities. Violations are punishable by imprisonment of at least one year or a fine ranging from three to five times the profits gained or losses avoided through such acts.