KB workers accused of making $9 mil. in unfair profits using confidential information

The Financial Services Commission's headquarters / Yonhap

By Lee Yeon-woo

KB Kookmin Bank employees and their acquaintances allegedly made 12 billion won ($9.6 million) in illicit profits by stock trading using confidential information, financial authorities said Wednesday.

The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) jointly announced that they have notified the prosecution after identifying some KB Kookmin Bank employees, responsible for the securities business of listed companies, having used undisclosed crucial information for stock trading.

The authorities allege that these employees leveraged confidential information from 61 corporations, such as details and timings of capital increases, in their trading activities. Once the information was publicly announced, they sold their shares for a profit, realizing illicit gains estimated at 6.6 billion won.

Furthermore, these employees are believed to have shared pertinent information with colleagues, family members, and acquaintances. These individuals also gained unfair profits amounting to 6.1 billion won, bringing the total illicit profit to 12.7 billion won.

Financial authorities view this incident with grave concern, as bank employees' misuse of confidential information can erode the public's trust in the capital market. They have emphasized that strict actions will be taken against any unethical behavior, especially involving financial institution employees seeking personal gains.

The number of employees implicated in the case ranges from 6 to 8. The bank told The Korea Times that a senior official, found guilty, has been suspended from duties, while others are currently under investigation by the prosecution.

“We deeply regret the occurrence of such an incident and pledge our full cooperation with the prosecution's investigation,” said a KB Kookmin Bank official.

In addition to this case, financial authorities discovered that several departments of the bank responsible for securities businesses have been deficient in managing and securing internal information from client firms. In response, the authorities intend to establish accountability for any future infractions and enhance the bank's internal control system.

The financial regulator noted that the use of undisclosed information by bank employees is an issue that should be seriously dealt with as it damages trust in the capital market. The regulator added that it would take stern measures against unfair activities by employees of financial firms such as seeking illicit personal profits while enhancing joint investigation in the capital market.

“Employees of financial firms who obtain insider information involving listed companies through stock or loan businesses are quasi insiders according to the capital market act. They are subject to criminal punishment if they use the undisclosed information for stock trading or give the information to other people,” the financial regulator stressed.