Insider Trading in Stocks... POSCO Plummets After Employee Prosecution by Prosecutors

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Sixty-four POSCO executives, including Chairman Choi Jung-woo, were reported to the prosecution last year in March for bulk purchasing the company's own shares. The suspicion is that the company used undisclosed information for stock investment ahead of the announcement of a favorable stock market disclosure regarding the repurchase of treasury shares. The company stated that the employees bought shares at a low price amid the sharp plunge in the domestic stock market due to COVID-19 at the time, but the stock price, which soared recently due to steel price increases, has been sharply falling since the 9th.

Organizations such as People’s Solidarity for Participatory Democracy, the Metal Workers' Union, and the Minbyun Civil Economy Committee held a press conference in front of the Seoul Central District Prosecutors' Office on the morning of the same day and announced that they had reported 64 POSCO executives, including Chairman Choi, to the prosecution on charges of violating the 'Capital Markets and Financial Investment Business Act.'

According to People’s Solidarity for Participatory Democracy, former POSCO Vice President Jeon purchased 1,000 POSCO shares on March 12 last year, followed by Finance Director Lim buying 300 shares the next day. Subsequently, Chairman Choi Jung-woo bought 615 shares on March 17, President Jang In-hwa 500 shares on March 18, and by March 31 last year, 64 executives had purchased the company’s shares. POSCO then held a board meeting on April 10 last year and decided to repurchase treasury shares worth 1 trillion won over one year.

People’s Solidarity for Participatory Democracy pointed out, "Vice President Jeon was in charge of POSCO’s Strategic Planning Headquarters, and Director Lim was known to have overseen the treasury share repurchase operation," adding, "Not only did the 64 executives systematically purchase the company’s shares during a specific period, but the purchase quantities were also similar, ranging from about 100 to 300 shares, as if pre-arranged, which reasonably suggests that they received the same information in advance."

Some argue that the concentrated purchase of POSCO shares by executives in March last year was likely a low-price purchase due to the stock market crash caused by the COVID-19 pandemic. POSCO also stated, "As the company’s stock price plummeted due to the COVID-19 pandemic, the accused executives voluntarily purchased company shares to demonstrate responsible management intentions."

However, People’s Solidarity for Participatory Democracy argued, "While it is true that company executives sometimes purchase shares for responsible management, they do not buy shares just before a favorable company disclosure like the accused did," and added, "Since a favorable disclosure was about to be announced, they purchased shares without any economic risk, which constitutes trading using undisclosed internal information."

POSCO’s stock price, which was sluggish at the beginning of the year, surged significantly from last month when steel price increases began in earnest. With expectations that economic normalization would positively impact the company’s performance, the stock rose 30.96% from the 29th of last month to the day before yesterday. During the same period, foreigners purchased over 1 trillion won worth of shares, ranking POSCO third among net foreign purchases.

However, POSCO’s stock, which started trading with an upward trend on the day, has been sharply falling after the prosecution report by People’s Solidarity for Participatory Democracy. As of 1:18 p.m. on the day, POSCO’s stock price dropped 5.13% (16,500 won) from the previous day to 305,000 won.

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