As the settlement of account period for listed companies and unfair trading practices like price manipulation became rampant, the Financial Supervisory Service warned.
On the 24th, the FSS announced that among the 169 cases of the three major unfair trading practices (insider trading, price manipulation, and fraudulent trading) detected and acted upon over the past three years, 21 cases were related to settlement of account information.
Insider trading was the most frequent with 17 cases, followed by fraudulent trading with 3 cases, and a complex case (insider trading + fraudulent trading) with 1 case. The information related to the settlement of account used in insider trading actions included adverse information like unfavorable audit opinions and deteriorating business performance, accounting for 82% of the cases.
Among the 66 suspects, 42 were company insiders. Of these, 14 were major shareholders, and 25 were executives. There were 55 suspects who were reported to the prosecution.
The largest shareholder of Company A learned from the accounting team that the company's operating profit and net profit for the current term fell by 70% compared to the previous year. Consequently, the largest shareholder sold shares before making the announcement of "a change in sales or profit structure of more than 30%." This largest shareholder has since been reported to the prosecution.
There were 18 corporations where unfair trading related to settlement of account occurred, with an average capital of 17.6 billion won. Eleven corporations had a capital of less than 20 billion won. They recorded a net loss over the past three years, and their liability ratio was 216.1%, which is double the average of listed companies. Nine corporations received unfavorable audit opinions, and six delayed in their submissions.
Out of the 18 corporations involved, 12 issued 324.3 billion won in private convertible bonds (CB) under the guise of improving their financial structure. Seven conducted a third-party allocation of paid-in capital worth 181.6 billion won. Additionally, it was revealed that the major shareholders of these companies had low equity stakes, leading to frequent changes in major shareholders. The average equity stake of the major shareholders among these 18 corporations was 26.9%, which is 16.2 percentage points lower than that of regular listed companies, with 13 experiencing changes in major shareholders within the last three years. Fourteen of the 18 corporations are KOSDAQ-listed, with five being delisted due to unfavorable audit opinions.
The FSS plans to monitor stocks that show signs of irregularities, such as unfavorable audit opinions during the settlement of account period, closely. It intends to track down those suspected of involvement in unfair trading to impose penalty surcharges or take criminal measures.
The FSS noted, "Employees and major shareholders of listed companies need to be cautious with stock transactions during the settlement of account period," adding, "Investors should be wary of false information and take care not to be involved in unfair trading."