Securities Company Employees Pursued Private Interest Using Convertible Bond Information

Former securities company employees who made hundreds of millions of won privately using information they learned from their duties have been put on trial.

The Seoul Central District Prosecutors' Office today (30th) indicted seven people, including A, a former head of the IB business team at Meritz Securities, without detention on charges of violating the Capital Markets Act.

Mr. A and others are accused of earning more than 990 million won, including interest and conversion gains, by taking over convertible bonds with information he learned while arranging investors for convertible bonds of KOSDAQ listed companies in 2019.

They bought convertible bonds using a special purpose corporation that invested funds in their family name and then siphoned off profits by submitting false documents to the tax authorities as if they had obtained services from the corporation.

Earlier, the prosecution also indicted three former employees of Meritz Securities, including Park, in July, who borrowed 118.6 billion won from other financial institutions to privately acquire real estate that they learned about the sale in the course of their duties and exchanged hundreds of millions of won in return for the help.

Prosecutors said a serious moral hazard has been confirmed in which executives and employees of large publicly trusted securities firms use job information that is expected to generate profits, and stressed the need to strengthen the internal control system of securities firms.