On February 5, the financial authorities conducted a search and seizure of a media company after detecting that reporters had allegedly used positive news articles about specific stocks to secure trading profits.
The Joint Task Force for Eradicating Stock Price Manipulation, which is composed of the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange, carried out a search and seizure that day at the headquarters of The Korea Economic Daily in Jung-gu, Seoul.
The Joint Task Force is reported to have detected indications that some reporters at the media outlet were involved in front-running. Front-running refers to the practice of buying stocks based on information obtained in advance, then writing positive articles, and finally selling the stocks after the price rises to secure trading profits. If confirmed as fact, this would constitute a violation of the Capital Markets Act and could result in imprisonment of at least one year, among other penalties.
The Joint Task Force believes that the unjust gains they obtained through front-running amount to several billions of won.
Since last year, the financial authorities have been conducting an intensive investigation into cases in which some reporters abused their authority to write articles to engage in unfair trading. Previously, the Capital Markets Special Judicial Police of the Financial Supervisory Service arrested and referred to the prosecution in November last year two individuals, former reporter A and full-time investor B, who allegedly used so-called "special stock articles," which are positive news reports on particular stocks, to obtain more than 10 billion won in unjust gains.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
