First foreigner penalized for disrupting Korean stock market

2017.09.28 15:59:22 | 2017.09.28 15:59:52

이미지 확대
A non-Korean national for the first time has been fined for reaping illicit profits in stock transaction on the Korean bourse through abuse of confidential trading information.

The securities futures committee under the Financial Services Commission (FSC) on Wednesday reviewed a case involving the top chief of a Hong Kong-based asset management company accused of using access to confidential trade information for personal gain which ended up hurting other investors. The person whose identity has not been revealed profited 378 million won ($329,038) from the illicit transaction which would be entirely snatched away in fines.

“If someone trades using important market information that could affect stock prices such as block trade he or she learned of in advance, the act falls under the category of banned market disruption. Any profit or losses caused by illicit transaction is taken away through that much of fine,” said a committee official.

It is the first time a non-Korean citizen has been penalized since acts unsettling the market have been banned under the capital market law effective of July 1, 2015.

The person on Jan. 6, 2016, was approached by Credit Suisse which was lead-managing the deal where Jabez Partners, then second-largest stakeholder in Hyundai Securities, was seeking to sell its entire 9.54 percent stake in the brokerage house through after-hours block sale. The company did not take part in the bid, but the accused instead used the information to short-sell Hyundai Securities shares through one of the company’s funds. Mass-scale short sales sent Hyundai Securities shares to close 3.9 percent down on Jan. 7, which cut into offering price of Jabez’s holdings on the following day.

By Han Ye-kyung

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]