South Korea's financial authorities have caught an investor relations executive at a listed company who bought shares in advance based on clinical trial results and technology transfer information about the company's new drug, reaping illicit profits.
The Securities and Futures Commission held a regular meeting on the 2nd and referred B, an IR executive at A, a KOSDAQ-listed company, to prosecutors on suspicion of using material nonpublic information in violation of the Capital Markets Act.
According to the commission, B bought shares of A from March to June 2024, before the release of key results from a Phase 1 clinical trial of a drug the company was developing and information on a technology transfer deal for the drug. B gained about 20 million won in illicit profits. B also traded the shares through an account held in another person's name, evading the requirement to report his own shareholdings.
When insiders such as a listed company's largest shareholder or its executives and employees use material nonpublic information obtained through their duties in trading, they can face criminal punishment including a prison term of at least one year or a fine of up to six times the illicit gains. Administrative fines can be imposed at up to twice the amount of the illicit gains.
The commission said it "will continue to closely monitor unfair trading practices to ensure fairness in the capital markets and protect investor confidence, and will thoroughly investigate and take stern action against any violations detected, doing its utmost to establish order in capital market transactions."
