FSS Special Investigation Team Sends KONEX Executive to Prosecutors for Using 'Undisclosed Information'

Four KONEX executives and employees who sold their shares after learning in advance about the failed KOSDAQ transfer listing have been referred to the prosecution on charges of 'insider trading.'

The Capital Market Special Judicial Police (Special Judicial Police) of the Financial Supervisory Service announced on the 19th that a total of four people, including one who delivered the adverse undisclosed information and three who received the information and sold shares before the information was disclosed, were referred to the prosecution with a 'prosecution opinion.'

According to the investigation, an executive of a KONEX-listed company learned that the transfer listing had effectively failed during the process of conducting a paid-in capital increase to meet the transfer listing requirements. He conveyed the adverse information of the 'failed KOSDAQ transfer listing' to a small number of individual investors with whom he had a close relationship. They are suspected of avoiding losses worth approximately 1.1 billion KRW by selling their shares before the adverse information was made public.

KONEX-listed companies fall under the category of 'stock-listed companies' under the Capital Markets Act. Using undisclosed information for stock trading or allowing others to use such information can lead to criminal penalties for violating Article 174 of the Capital Markets Act.

The Financial Supervisory Service explained that not only buying shares using positive undisclosed information such as improved earnings before its disclosure but also selling shares to avoid losses using adverse undisclosed information such as bankruptcy before its disclosure constitutes insider trading.

The Special Judicial Police stated, "We plan to thoroughly investigate and strictly respond to any acts that undermine the fair trading order of the capital market."

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