Financial authorities decided to report and notify the prosecution about IM executives who unlawfully profited by using undisclosed important information related to new drug development and falsely announced a new theme-based business.
The Securities and Futures Commission, under the Financial Services Commission, announced on the 21st that it has decided to report and notify the prosecution about the employees of the pharmaceutical company BOCON and the executives of the electronic components manufacturer IM for using undisclosed important information prohibited under the Capital Markets Act (Article 174) and for engaging in unfair transaction activities (Article 178).
According to the Securities and Futures Commission, BOCON employees used positive undisclosed information related to new drug development for investment during February to March 2023. They purchased stocks just before the public announcement or conveyed information to acquaintances and profited improperly by selling their stocks when the prices rose, gaining tens of millions of won.
The Securities and Futures Commission noted that the lack of physical separation of workspace for those responsible for public disclosures and accounting led to the easy exposure of critical undisclosed information for business operations. The suspects exploited this environment to gather and utilize the undisclosed important information before being caught.
The Securities and Futures Commission stated, "In the pharmaceutical and bio sectors, most information affecting corporate value is based on undisclosed clinical results and approval status, making it difficult for general investors to access such specialized information until it is disclosed, which increases the likelihood of unfair transactions such as using undisclosed important information."
IM executives falsely announced the promotion of an overseas mineral development project unrelated to their main business in June 2023. Despite formally signing a memorandum of understanding with an overseas joint venture, they exaggerated the potential for securing mining rights and generating significant profits in a press release.
The stock price of IM soared significantly in a short period due to these false announcements and media reports. The Securities and Futures Commission explained that the executives gained improper profits estimated at hundreds of millions of won as the stock price surged by 24% just before the unfair transaction activities.
The Securities and Futures Commission remarked, "They made false claims about entering theme-based new businesses, leading several media outlets, including major domestic newspapers, to report it, which caused general investors to perceive that actual revenue could be generated from this business. However, no actual securing of mining rights, economic evaluations, or investment executions were made."
The Financial Services Commission remarked, "We will thoroughly investigate and rigorously address unfair trading activities that can undermine the order of the capital market and cause harm to investors, such as using undisclosed important information acquired in the course of duties and engaging in fraudulent or exaggerated reports."