Dongbu Group Chairman Kim Jun-ki is facing a criminal investigation about insider trading. The Financial Supervisory Service said Kim was suspected of avoiding financial losses illegally by selling shares he held in Dongbu Corp., the group's construction unit, and other affiliates.
The insider trading case involving the Dongbu Group founder came on the heels of the revelation that Choi Eun-yeong, former chairwoman of Hanjin Shipping, came under scrutiny over her alleged insider trading. Choi and her two daughters have been accused of selling their stock in the faltering shipping company just days before its application for a creditor-led debt restructuring program.
The two incidents have ― once again ― raised the specter of an ethical hazard involving our business tycoons linked to insider trading.
In the Dongbu case, the chairman allegedly used "undisclosed information'' to dispose of his billions of shares in the Dongbu subsidiaries about one month before Dongbu Corp. was placed under court receivership in December 2014. The company's share price plunged from 1,300 won in November 2014 to 800 won in January the following year.
The financial regulator reportedly has gathered much circumstantial evidence that Kim obtained illicit gains as an insider who can gain access to undisclosed corporate information.
Dongbu admitted that Kim had used borrowed-name stock trading accounts for more than two decades to defend his managerial rights over the group. But it denied the insider trading charges against Kim, saying the chairman spent most of the proceeds from the stock sale to prop up the group's shaky affiliates.
The court will hand down a verdict on Kim's insider trading charges ultimately. But the time for the government to uproot the evil practice, which would enable business owners and their families to reduce their losses by selling stocks before corporate problems were brought to light, is long past. That's like swimming while touching the ground.
The bigger problem, however, is that the nation's family-run big business groups, known as chaebol, have been wielding unchecked power because of flawed corporate governance. The reality is that some shameless tycoons make it a rule to sell shares swiftly at the expense of other shareholders instead of making efforts to rescue their companies in times of crisis. As the restructuring of marginal industries got into full swing, holding major shareholders accountable for management failures should have been done much earlier.
The prosecution should get to the bottom of the two insider trading cases to set a precedent for harsher punishment for tycoons who commit such disgraceful offenses.
The insider trading case involving the Dongbu Group founder came on the heels of the revelation that Choi Eun-yeong, former chairwoman of Hanjin Shipping, came under scrutiny over her alleged insider trading. Choi and her two daughters have been accused of selling their stock in the faltering shipping company just days before its application for a creditor-led debt restructuring program.
The two incidents have ― once again ― raised the specter of an ethical hazard involving our business tycoons linked to insider trading.
In the Dongbu case, the chairman allegedly used "undisclosed information'' to dispose of his billions of shares in the Dongbu subsidiaries about one month before Dongbu Corp. was placed under court receivership in December 2014. The company's share price plunged from 1,300 won in November 2014 to 800 won in January the following year.
The financial regulator reportedly has gathered much circumstantial evidence that Kim obtained illicit gains as an insider who can gain access to undisclosed corporate information.
Dongbu admitted that Kim had used borrowed-name stock trading accounts for more than two decades to defend his managerial rights over the group. But it denied the insider trading charges against Kim, saying the chairman spent most of the proceeds from the stock sale to prop up the group's shaky affiliates.
The court will hand down a verdict on Kim's insider trading charges ultimately. But the time for the government to uproot the evil practice, which would enable business owners and their families to reduce their losses by selling stocks before corporate problems were brought to light, is long past. That's like swimming while touching the ground.
The bigger problem, however, is that the nation's family-run big business groups, known as chaebol, have been wielding unchecked power because of flawed corporate governance. The reality is that some shameless tycoons make it a rule to sell shares swiftly at the expense of other shareholders instead of making efforts to rescue their companies in times of crisis. As the restructuring of marginal industries got into full swing, holding major shareholders accountable for management failures should have been done much earlier.
The prosecution should get to the bottom of the two insider trading cases to set a precedent for harsher punishment for tycoons who commit such disgraceful offenses.
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