South Korea’s Securities and Futures Commission has taken action in three separate alleged unfair-trading cases involving corporate executives, an individual investor and undisclosed-information recipients. The decisions were made at the commission’s 17th regular meeting on September 30, according to the Financial Services Commission. The cases involve alleged misuse of material nonpublic information and alleged market manipulation under the Capital Markets Act.
- Decision date
- September 30, at the commission’s 17th regular meeting
- Cases
- Three separate alleged unfair-trading cases
- Legal areas
- Material nonpublic information misuse and market manipulation
- Disclosure status
- Subjects and securities were not publicly identified
In the first case, the representative director of a company negotiating to purchase part of a listed company’s shares from a large acquirer allegedly passed information about the pending share-transfer agreement to two acquaintances. The acquaintances allegedly used the information to trade the listed company’s shares. The commission referred the suspected conduct involving the executive and the first recipients to prosecutors, citing alleged gains worth hundreds of millions of won.
The second case involved an individual investor who allegedly used multiple accounts belonging to family members and acquaintances to place orders in a company’s shares. The investor allegedly alternated manipulation orders between the Korea Exchange and the alternative trading system NXT, concentrating some orders in NXT’s relatively thin order book. The authority said the investor allegedly used small orders to move NXT prices and raise the displayed integrated market price, while seeking trading gains and trying to prevent forced sales of pledged shares.
The third case concerned the largest shareholder and representative director of a real-estate development company. The individual allegedly used 11 accounts held in the names of four people, including the company, a spouse and a sibling, to submit thousands of high-price purchase, closing-price and matched or fictitious orders over two years and five months. The alleged activity targeted a lightly traded stock that could be moved with comparatively small amounts of money and produced alleged gains worth tens of billions of won. The company and the executive also allegedly failed to make required large-shareholding reports after acquiring a stake of at least 5 percent.
The commission said market manipulation can include transactions intended to create the false appearance of active trading, induce others to trade or fix and stabilize a market price. It also warned that manipulation may occur through a gradual, long-term rise rather than only through sharp price swings. Investors should therefore exercise caution when a thinly traded stock continues to rise without a clear reason. The authorities said they will continue responding firmly to suspected misuse of undisclosed information and market manipulation. The names of the subjects and securities were not disclosed because of possible effects on investigations.