Hacked Lawyer's Email While Working in Law Firm IT Department
Illegally Obtained Undisclosed Information and Made 2 Billion Won Through Stock Trading
A former employee of the law firm Lee & Ko has been brought to trial on charges of making tens of billions of won in illicit gains by hacking into the email account of a corporate advisory lawyer and using undisclosed information obtained in the process.
On April 28, Yonhap News reported that the Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Kim Suhong) indicted two individuals, including a former IT department employee of Lee & Ko, identified as Mr. A, on charges of violating the Act on Promotion of Information and Communications Network Utilization and Information Protection (illegal access to information and communications networks) and the Capital Markets Act (use of undisclosed information). Both were taken into custody.
From August 2022 to June of last year, Mr. A and others allegedly obtained the email passwords of lawyers in the corporate advisory team at Lee & Ko and accessed their accounts without authorization. They are accused of securing undisclosed information on matters such as tender offers, paid-in capital increases, and stock sale and purchase agreements involving companies including Hankook & Company. Subsequently, they allegedly raised funds through loans and mobilized family accounts to trade tens of billions of won worth of stocks, ultimately making illegal gains totaling 2,347,000,000 won.
Prosecutors also indicted, without detention, a former employee identified as Mr. B from the Special Situations (SS) division, one of the investment management arms of private equity firm MBK Partners, along with two acquaintances. They are accused of making illicit gains totaling 99,000,000 won using similar methods. Mr. B is accused of directly trading stocks or passing on undisclosed information to acquaintances, which he learned from meetings preparing for tender offers or from investment materials. His acquaintances allegedly used the undisclosed information received from Mr. B to earn a total of 799,000,000 won.
In February, prosecutors launched an investigation after receiving a report from the Financial Services Commission’s Securities and Futures Commission regarding violations of the prohibition on the use of material non-public information. Financial authorities suspected that a lawyer at Lee & Ko was also involved in the case, but prosecutors decided not to indict, stating that there was no evidence that the lawyer had passed on undisclosed information to others.
A prosecution official commented on the case, saying, "This investigation serves as a warning regarding the moral hazard among handlers of undisclosed information and the lack of internal control systems, especially in situations where tender offers, large-scale stock transfers, and third-party paid-in capital increases are frequent."
Lee & Ko stated, "We deeply regret that an employee of our firm used information obtained by hacking a lawyer's email account for stock investment," and added, "We will strengthen internal compliance training to prevent such unfortunate incidents from occurring in the future."
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