Prosecutors Conduct Search and Seizure at Meritz Securities and Ewha Group over 'Stock Sales Before Trading Suspension' (Comprehensive)
The prosecution investigating Meritz Securities' suspected "insider trading using undisclosed information" has launched a forced investigation.
The Tax Crime Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Park Hyun-gyu) sent prosecutors and investigators to about 10 locations on the morning of the 6th, including Meritz Securities' headquarters in Yeouido, Seoul, Ewha Group's headquarters, and residences of related parties, to seize related materials.
After analyzing the seized items, the prosecution plans to summon Meritz Securities and Ewha Group officials to investigate whether there was any collusion related to the leakage of undisclosed information and stock trading.
The prosecution suspects that Meritz Securities violated the Capital Markets Act by using undisclosed information to sell bonds with warrants (BW) and stocks exercised from warrants of Ewha Group affiliates such as Ewha Electric, and by having executives and employees privately use job-related information for convertible bond (CB) investments.
The investigation began following a notification from the Financial Supervisory Service (FSS). Earlier, the FSS reported to the prosecution after discovering through a planned inspection that employees of Meritz Securities' IB Division had used information obtained during private CB-related work to invest directly in CBs with their own and family funds.
Regarding the allegations of insider trading related to the suspension of trading of Ewha Group stocks, the case was fast-tracked to the prosecution. Three listed affiliates of Ewha Group?Ewha Electric, E-Tron, and EID?had their trading suspended in May and were delisted in September after it became known that arrest warrants had been requested for the company management on charges of embezzlement and breach of trust.
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Subsequently, suspicions arose that Meritz Securities had obtained information in advance from Ewha Group and sold stocks before the trading suspension.
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