“Settling 24 Year-End Unfair Trading Cases Involving Insider Trading”

Trading on non-public information, also known as insider trading, has been a prevalent issue in the financial world. Over the past three years, there have been 24 cases of unfair trading related to year-end settlements, where individuals like executives and largest shareholders used undisclosed information to gain an unfair advantage in the market.

One such case involved B, the CEO and largest shareholder of Company A, who avoided losses by selling shares before the public disclosure of the company’s auditor’s disclaimer of opinion due to deteriorating liquidity. Similarly, D, the CEO of Company C, engaged in unfair trading by conducting a sham capital increase through embezzled funds to deceive investors about the company’s financial health.

The Financial Supervisory Service recently revealed that these 24 unfair trading cases were detected and addressed, with 6 cases occurring in 2023, 9 in 2024, and another 9 in the previous year. The majority of these cases (19 out of 24) took place in the first quarter of each year, coinciding with the period when most domestic listed companies finalize their annual financial reports.

Of the different types of unfair trading, cases involving the use of non-public information were the most common, comprising 67% of all cases. These instances typically revolved around negative information such as adverse audit opinions or declining business performance. Additionally, there were other cases aimed at preventing delisting or forced selling of pledged shares, as well as instances of market manipulation.

It was found that most suspects involved in these unfair trading cases were insiders affiliated with the respective companies. Out of 68 total suspects, 57 were insiders, including executives, largest shareholders, and employees. The remaining 11 suspects either had close relationships with insiders or were connected to company insiders in some way.

To combat unfair trading practices, the Financial Supervisory Service plans to provide training on violation cases to officers and employees of listed companies. Additionally, they will closely monitor stocks with a high likelihood of unfair trading and take strict action against any suspected violations. Executives or major shareholders of listed companies are advised to disclose their trading plans at least 30 days before scheduled trading dates to avoid potential administrative fines or criminal punishment for using non-public information.

In conclusion, the prevalence of unfair trading cases, particularly those involving non-public information, highlights the need for increased oversight and vigilance in the financial markets. By implementing stricter regulations and enforcement measures, authorities aim to protect investors and maintain the integrity of the market.