Current and former employees of a major domestic securities firm have been put on trial on charges of reaping hundreds of millions of won in illicit profits through proxy-name stock trading using undisclosed information.

The Seoul Southern District Prosecutors' Office announced that it indicted two individuals—a person in their 30s identified as A and a person in their 40s identified as B, both former or current brokerage employees—yesterday (September 30) under the Capital Markets Act and the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.

It was revealed that A, who was an employee at a domestic brokerage, used undisclosed information regarding public stock tender offers of three listed companies obtained during the course of work to purchase the stocks in advance through proxy-name accounts under the names of relatives for about one year starting in January 2023.

A is accused of pocketing a total of 97 million won in ill-gotten gains by selling the shares after related information was publicly disclosed within a week and stock prices rose.

The scale of A's stock purchases amounted to approximately 270 million won.

Stock prices of the three listed companies rose by an average of 12.2 percent immediately after the public tender offer disclosure, with the maximum increase reaching 14.65 percent.

B, who was indicted along with A, is a former boss of A at the brokerage. B is accused of demanding undisclosed information while providing 25 million won worth of money and entertainment to A even after leaving the company.

After receiving undisclosed information related to the public tender offers of the three listed companies from A, B purchased the relevant stocks using proxy-name accounts under the names of B and B's children.

The total amount used for stock purchases was 1.85 billion won, and the illicit profits B gained from the crime amounted to 287 million won.

In particular, prosecutors found that B actively demanded information provision by even teaching A how to acquire undisclosed information, leveraging B's experience and knowledge working at a securities firm.

B is also accused of leaking the undisclosed information received to three acquaintances who are university alumni.

Prosecutors found that the illicit profits these acquaintances gained using the information reached 2.3 billion won.

However, because criminal punishment under the Capital Markets Act is limited to insiders and primary information recipients, only administrative fines were imposed on the three university alumni who received the information.

Prosecutors explained that when an investigation by the Financial Services Commission began, A and B attempted to destroy evidence, such as replacing cell phones and PCs while sharing their criminal circumstances with each other.

Prosecutors have requested pre-indictment asset preservation to confiscate the criminal proceeds acquired by them.