SNU business club alumni caught in alleged insider trading scheme
Hwang Seon-oh, deputy governor of the Financial Supervisory Service and head of the joint task force on stock price manipulation crackdown, speaks during a briefing at the Korea Exchange in Yeouido, Seoul, Tuesday. Newsis
Financial authorities said Tuesday they had uncovered an alleged insider trading network involving members and alumni of a business club at Seoul National University (SNU) who shared undisclosed mergers and acquisitions (M&A) information and made more than 20 billion won ($14.7 million) in illicit gains.
The joint task force of the Financial Services Commission, Financial Supervisory Service and Korea Exchange (KRX) conducted raids at more than 20 locations, including the suspects' homes and workplaces, to secure evidence in the case.
The network allegedly involved more than five financial industry officials who attended Seoul National University and later worked at different asset management firms, private equity firms and listed companies, according to authorities.
The task force said it had been investigating the case for about two years, expanding the scope of its probe through tracing funds, analyzing transactions and examining the suspects' personal connections.
"The suspects did not gain access to the information as insiders at listed companies. Rather, they obtained it through their work on M&A deals involving the companies," an official at the joint task force said during a briefing in Seoul.
The official said the case was particularly serious because the suspected network repeatedly shared undisclosed information over an extended period, rather than involving a one-time violation by an individual.
"The information came from professionals who were bound by strict confidentiality obligations in the course of their M&A-related work and was passed on to family members and acquaintances," he said.
The suspects allegedly shared undisclosed information on multiple listed companies and used it to trade shares before the information became public.
They also allegedly passed the information to family members and acquaintances, who bought shares before the information was disclosed and sold them after stock prices rose. The suspects and those around them are believed to have made more than 20 billion won through the trades, the authorities said.
The information involved corporate governance changes, including tender offers and other M&A transactions that could significantly affect stock prices once announced.
The KRX initially detected suspicious trading patterns through its market surveillance system. The task force later combined several cases involving the same suspects and launched a joint investigation in May.
Authorities said the investigation is ongoing, and they plan to analyze evidence obtained through the raids before taking further action, including possible criminal complaints and fines of up to twice the illicit gains.
"We will continue to track down illegal insider trading involving undisclosed information and recover illicit gains," the official said.