Investor Reported to Prosecutors for Spreading Rumors on General Election Theme Stocks to Secure Profits

by Lee Dongwoo

Published 08 Jan.2025 20:14(KST)

A full-time investor who spread rumors related to political theme stocks ahead of last year's general election to make a profit has been reported to the prosecution.

On the 8th, the Securities and Futures Commission of the Financial Services Commission announced at its 1st regular meeting that it had taken action to 'notify investigative authorities' to the prosecution against full-time investor A, who spread rumors by highlighting 15 stocks as political theme stocks on stock-related internet sites and sold pre-purchased stocks when the stock prices rose, for violating the prohibition of unfair trading acts under the Capital Markets Act.

In April last year, ahead of the general election, Mr. A pre-accumulated 15 stocks including company B, and continuously posted on stock-related site bulletin boards articles emphasizing these stocks as political theme stocks based solely on connections or regional similarities, such as "An outside director is Facebook friends with ○○○," and "Rumor of ○○○ running for Yongsan? The headquarters is in Yongsan."

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After the stock prices rose, he sold all the pre-accumulated stocks to realize profits. He deleted the related posts immediately after selling.

The Securities and Futures Commission explained, "Political theme stocks have high price volatility and are difficult to predict, so caution is required when trading," and added, "The financial authorities are closely monitoring the market by operating a special crackdown team in response to the increased volatility of political theme stocks."

At the regular meeting held that day, the Securities and Futures Commission also resolved disciplinary measures including 3 cases of prosecution referral/notification, 7 cases of fines, and 1 case of securities issuance restriction.

Company D, which holds a 6.88% stake in company C, was fined for delayed reporting as it failed to meet the reporting deadline for the new large-scale holding obligation that arose when company C was newly listed in December 2021. Company E (which holds up to 19.79% of company F's shares) was fined for delayed reporting of the large-scale holding (change) obligation that arose from acquiring and disposing of convertible bonds (CB) issued by company F from October 2021 to June 2023.

The Securities and Futures Commission announced that it took action on a total of 113 cases last year (240 individuals and 144 corporations) related to violations of unfair trading disclosure and short-selling regulations.