"Former JSTINA CEO Kim Ki-seok Released on Bail After Selling Shares Before Negative Disclosure"

by Yoo Byeongdon

Published 21 Jun.2020 15:35(KST)

Kim Ki-seok, CEO of J.ESTINA

[Asia Economy Reporter Yoo Byung-don] It has been confirmed that Kim Ki-seok, former CEO of J.ESTINA, who was arrested on charges of avoiding losses by selling a large number of shares before disclosing adverse news expected to cause a stock price drop, has been released on bail.

The Criminal Division 13 of the Seoul Southern District Court (Chief Judge Shin Hyuk-jae) announced on the 21st that it accepted the bail request filed by former CEO Kim on the 25th of last month.

The court ruled that former CEO Kim falls under the "mandatory bail" reasons stipulated by the Criminal Procedure Act, meaning there is little concern that he would destroy evidence or harm related parties.

Instead, as a condition of bail, he was required to pay a deposit of 100 million KRW, and to notify and obtain permission from the court in advance when changing residence, attempting to leave the country, or traveling for more than three days.

Former CEO Kim is the younger brother of Kim Ki-moon, chairman of the Korea Federation of SMEs and the largest shareholder of J.ESTINA, as well as the second largest shareholder himself. From February 1 to February 12 of last year, he sold a total of 346,653 shares through off-hours trading and on-market transactions. Based on the closing prices on each trading day, the total amount of shares sold reached approximately 3 billion KRW.

On February 12, 2019, the last day of Kim’s stock sales, J.ESTINA announced after the market closed that its annual operating loss was 860 million KRW, which was 18 times larger than the previous year’s deficit.

Following this disclosure, the stock price, which had been in the 8,000 KRW range, plummeted to the 5,000 KRW range within a month. The downward trend continued, and as of the 19th, the closing price was 2,440 KRW.