'Financial Supervisory Service Special Investigation Unit Case No. 1' Securities Firm Analyst Arrested and Indicted for Insider Trading

[Asia Economy Reporter Yoo Byung-don] A securities firm analyst who gained unfair profits through 'front-running'?informing acquaintances of the contents before publishing reports analyzing specific stocks?has been brought to trial. This case is the first investigation conducted by the Financial Supervisory Service's Special Judicial Police, established last year, making the trial outcome highly anticipated.

The Securities Crime Joint Investigation Team of the Seoul Southern District Prosecutors' Office (Chief Kim Young-gi) announced on the 20th that they have arrested and indicted A (39), a researcher at Hana Financial Investment Research Center, on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (bribery, etc.) and the Capital Markets and Financial Investment Business Act. Additionally, B (39), a friend and accomplice of A, was indicted without detention on the same charges.

According to the prosecution, from June 2015 to May of last year, A informed B of stock recommendation reports before their publication. B then sold stocks at a time when the stock prices rose after the reports were issued, earning approximately 760 million KRW in unfair profits. The prosecution believes that A received cash and other valuables worth about 600 million KRW from B as compensation. It is known that the number of stocks involved in the trades A participated in amounts to several dozen, with related reports also numbering in the dozens.

This case is the first investigation by the Financial Supervisory Service's Capital Market Special Judicial Police, launched in July last year, and the first case applying 'fraudulent unfair trading' charges to a securities analyst who profited using reports. The Special Judicial Police conducted a search and seizure at Hana Financial Investment Research Center in September last year and applied for an arrest warrant for A in November, but the court dismissed it.

After receiving the case from the Special Judicial Police, the prosecution conducted supplementary investigations, confirmed circumstances indicating that A gained benefits from B in exchange for information, and re-applied for an arrest warrant. The court issued the arrest warrant for A on the 13th of this month.

The prosecution explained, "This is a significant case as it is the first investigation applying the charge of fraudulent unfair trading to a securities analyst who illegally gained profits using research reports."

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