"Market Manipulation and Insider Information Abuse in Capital Markets... 105 Charges Detected"

[Asia Economy Reporter Son Sunhee] A total of 105 cases of unfair trade suspicions were detected in the capital market last year. About half of these were found to have exploited undisclosed information to seek unfair profits.

On the 25th, the Korea Exchange Market Surveillance Committee announced that it identified a total of 105 cases of unfair trade suspicions through last year's abnormal transaction review and reported the details to the Financial Services Commission. Cases involving the use of undisclosed information accounted for 56 cases (53.3%), the highest number, followed by fraudulent trading with 22 cases (21%), and market manipulation with 18 cases (17.1%). In particular, fraudulent trading cases more than doubled compared to the previous year (10 cases) due to an increase in complex unfair trades related to no-capital mergers and acquisitions (M&A) and various theme stocks.

About 75% of all unfair trade suspicion cases occurred in the KOSDAQ market (78 cases), showing a concentration in KOSDAQ-listed stocks. KOSPI accounted for 22 cases (21%), and KONEX for 5 cases (4.7%). The average number of suspects involved in unfair trade suspicion cases was 14, and the average number of suspicious accounts was 20. The average amount of unfair profits per case was approximately 4.6 billion KRW.

According to the Korea Exchange, cases involving 'investment associations' increased among the unfair trades that occurred last year. Of the 22 fraudulent trading cases, 16 involved investment associations. A small number of unfair trade leaders exploit the anonymity and low regulation of investment associations to engage in the entire process of 'share acquisition → fundraising → stock price boosting → profit realization' and obtain unfair profits.

Additionally, several cases were found where individuals previously reported for similar unfair trade suspicions were caught again for repeating similar forms of unfair trading. This typically involved repeatedly holding large amounts of low-volume stocks through market manipulation and selling them when the stock price rose to gain profits. There was also a case where a person caught for exploiting company and affiliate business-related information to gain unfair profits was suspected of manipulating the prices of other stocks using the same method.

More than half of the unfair trades involved the misuse of undisclosed information, mostly positive undisclosed information. This included prior knowledge of management rights changes or fundraising information for investment, followed by clinical information on COVID-19 vaccines, performance-related information, and information related to delisting or designation as a management stock.

However, the suspicion cases detected by the Korea Exchange Market Surveillance Committee are only 'presumptions' that unfair trading is suspected, and the allegations have not been confirmed. If the Financial Services Commission, which receives the reports, determines after its own review that there is a specific suspicion, the case will be referred to investigative agencies such as the prosecution.

The Korea Exchange stated, "Under a firm cooperation system with regulatory agencies, we plan to early detect fraudulent trading involving investment associations, ultra-short-term market manipulation, unfair trading in leading chat rooms, and repeated unfair trading by specific suspects, and to focus on reviewing social issues and major cases."

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