NH Investment Executive Falsely Profited 2 Billion Won by Transferring Non-Public Information on 11 Stocks to Acquaintances

Joint Response Team Raids NH Investment... Second Case of "Financial Ruin" in One Month

Underwrote Over Half of Tender Offers, Including Korea Zinc... "Serious Crime Equivalent to Stock Manipulation"

NH Investment & Securities NH Investment & Securities building. [Provided by NH Investment & Securities]

Financial authorities have launched an investigation into allegations that a senior executive in the investment banking (IB) division of NH Investment & Securities [005940] used non-public information related to a listed company's tender offer.

This is the second case investigated by the Joint Response Team, established to eradicate unfair trading practices, as emphasized by President Lee Jae-myung.

The Joint Response Team, composed of the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange, raided the executive offices and tender offer-related departments at NH Investment & Securities' headquarters on the 28th.

Mr. A is accused of repeatedly transferring crucial information related to tender offers for 11 listed companies underwritten by NH Investment & Securities over the past two years to acquaintances, including colleagues and family, thereby illicitly profiting approximately 2 billion won.

The Joint Response Team considers a total of four individuals as suspects, including Mr. A, his family, his family's acquaintances, and an employee from the sales division.

These individuals allegedly purchased shares before the tender offer was publicly announced, and then sold them once the share price rose due to the announcement.

Flowchart of tender offer non-public information misuse [Provided by the Joint Response Team]

According to the Joint Response Team's fund tracking, there were frequent large-scale financial transactions between Mr. A and the information recipients suspected of being related to stock trading before and after the tender offer announcements.

Circumstances suggesting the sharing of illicit profits among them have also been uncovered.

The suspects also exhibited behavior aimed at evading the surveillance of the company and financial authorities.

Traces of their attempts to evade regulatory oversight, such as utilizing nominee accounts under relatives and frequently changing trading accounts, have been confirmed.

In particular, given NH Investment & Securities' dominant position in tender offer operations, the repercussions of this case are expected to be significant.

NH Investment & Securities underwrote 28 out of 55 tender offers (51%) conducted from 2023 to the first half of this year.

It also handled large-scale transactions, such as the tender offer for Korea Zinc shares conducted by the MBK Partners and Young Poong consortium last year.

The Joint Response Team stated, "We will thoroughly identify and prosecute individuals with information advantages, including employees of financial companies and listed companies, who undermine the fairness of the capital market, leading to severe criminal penalties and administrative sanctions." They added, "We once again emphasize that this is a serious criminal act equivalent to stock manipulation, and we will act with a zero-tolerance policy for any violations."

However, Mr. A denies the charges. It is also reported that he claims to have been unaware of his family members' stock trading activities.

Through the raid conducted on the same day, the Joint Response Team secured various documents and PC hard drives to investigate the channels through which non-public information was obtained and how it was disseminated to family and acquaintances.

Given President Lee Jae-myung's consistent stance on severe punishment for stock manipulation and unfair trading, attention is focused on whether more cases of "financial ruin" will emerge.

In its first case, the Joint Response Team uncovered a large-scale stock manipulation involving approximately 100 billion won, orchestrated by super-rich individuals such as operators of general hospitals and large cram schools, former executives of prominent private equity funds, and financial experts including branch managers of financial companies. Yonhap News Agency