Elite Finance Professionals from Prestigious University Clubs Accused of 20 Billion Won Illegal Profits Through Information Cartel

A case has been uncovered in which "financial elites" from prestigious university business clubs formed an information cartel to share undisclosed merger and acquisition (M&A) information over several years, illegally pocketing more than 20 billion won.

The Joint Response Task Force against Stock Manipulation—comprising the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange—announced on September 29 that it has uncovered individuals utilizing undisclosed information, including private equity fund operators and listed company officials who amassed illegal profits through this method, and raided some 20 locations including the homes and offices of the suspects.

According to the authorities, the key suspects in this case formed ties while participating together in prestigious university business clubs and global consulting firms.

They subsequently moved to respective private equity fund operators and listed companies, where they handled M&A-related work such as public tenders.

During this process over the past five years or so, they repeatedly shared positive undisclosed information regarding multiple stocks acquired in the course of their duties.

They also passed on the information to family members and acquaintances, allowing them to use it for stock trading.

Authorities determined that the key suspects, along with their family members and acquaintances, acquired more than 20 billion won in illegal profits by purchasing the stocks in advance before the information was made public and disposing of them at high prices after the stock prices rose following the disclosure.

Authorities judged the case to be serious given that the sharing of undisclosed information was repeated over a long period within a close-knit "information cartel," and that M&A experts bound by strict confidentiality obligations served as the source of the information.

Currently, the Securities and Futures Commission has suspended the securities accounts holding the funds in accordance with the Capital Markets Act to prevent the suspects from concealing their ill-gotten gains.

The authorities announced plans to promptly conclude additional investigations by analyzing the materials and evidence secured through voluntary investigations and raids on this day.

They also plan to pursue follow-up measures such as filing criminal complaints and imposing fines of up to twice the amount of the illegal profits.

This case came to light during the process of in-depth analysis by the FSS and the exchange, consolidating cases in which the same suspects were repeatedly implicated among undisclosed information misuse cases detected through market monitoring over the past few years.

Accordingly, the joint response task force has been conducting investigations through close cooperation among related agencies since May.

The joint response task force stated the significance of the case, saying, "Through the raids and account suspension measures against the financial elites involved in this case, the authorities have demonstrated that insider misuse of undisclosed information will be tracked down to the end to root it out from the capital market and recover illegal profits."


(Photo provided by Financial Services Commission, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.