Exchange Uncovers Unfair Forces Using Paper Companies for Corporate Raiding

[Asia Economy Reporter Lee Seon-ae] The Korea Exchange Market Surveillance Committee announced on the 27th that it recently uncovered unfair trading cases involving the use of paper companies and investment associations with unclear substance to conduct serial corporate raids on multiple listed companies.

According to the Exchange, this group established paper companies to acquire companies with a short listing period and abundant internal funds, using these companies as funding sources for corporate raids.

The acquired listed companies were made to purchase unlisted companies with unclear corporate value at high prices, and these acquisitions were excessively promoted as new business ventures to artificially boost stock prices.

Furthermore, through repeated issuance of convertible bonds that only appeared to raise funds, the paid-in funds were siphoned off to investment associations and unlisted companies, enabling the acquisition of other listed companies in a sprawling manner.

During this process, the financial soundness of the listed companies rapidly deteriorated, causing investor damage, the Exchange reported.

Last week (18th?22nd), the Exchange took market alert measures such as designating investment caution stocks for a total of 84 cases, including stocks with a surge of unhealthy orders or abnormal short-term price spikes.

The characteristics of investment caution companies summarized by the Exchange include ▲ frequent disclosure corrections and contract delays during the largest shareholder change process ▲ unclear substance of the changed largest shareholder ▲ largest shareholder holding less than 10% stake or providing held shares as collateral ▲ frequent addition of business purposes related to market themes ▲ excessive external fund raising compared to capital ▲ acquisition of unlisted company shares unrelated to the main business.

The Market Surveillance Committee plans to effectively respond to large-scale and organized complex unfair trading through the newly introduced CAMS, minimizing investor damage and enhancing market soundness.

CAMS, short for 'Catch-All Market Surveillance,' is a market surveillance system that systematically analyzes big data (corporate and personal information, news, disclosures, etc.) to effectively detect major unfair trading such as fraudulent trading, price manipulation, and insider trading.

An Exchange official stated, "We plan to take the lead in eradicating speculative forces and protecting investors through timely responses to unfair trading by continuously advancing the market surveillance system," adding, "We will also promote strengthened unfair trading prevention education targeting management of listed companies that are highly exposed to corporate raid-type unfair trading."

This content was produced with the assistance of AI translation services.