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Photo=Meritz Fire & Marine |
[Alpha Biz= Paul Lee] Seoul, September 25 – South Korean prosecutors launched a large-scale raid on the headquarters of Meritz Fire & Marine Insurance amid allegations that former executives engaged in insider trading ahead of a high-profile merger announcement.
The Seoul Southern District Prosecutors’ Office (Financial Crimes Division 1, headed by Chief Prosecutor Im Se-jin) confirmed that investigators executed a search and seizure warrant at the company’s Gangnam headquarters on Wednesday morning.
The probe centers on allegations that a former CEO (Mr. A) and an executive (Mr. B) of Meritz Fire purchased large volumes of company stock in late 2022, just before Meritz Financial Group announced its plan to fully acquire Meritz Fire & Marine and Meritz Securities as wholly owned subsidiaries. Authorities believe the executives, using their own and family accounts, secured illicit profits of about KRW 5 billion (approx. USD 3.6 million) when the stock price surged to the upper daily limit following the merger announcement.
The Financial Services Commission (FSC) had earlier referred the case to prosecutors, after the Securities & Futures Commission determined on July 17 that the trades likely violated the Capital Markets Act’s ban on the use of material non-public information. The Supreme Prosecutors’ Office subsequently assigned the case to the Seoul Southern District Prosecutors’ Office on July 28.
The accused executives reportedly claimed the stock purchases were unrelated to the merger plan. However, regulators concluded that trading patterns across family accounts strongly suggested the activity was not consistent with “ordinary investment behavior.”
In response, Meritz Fire & Marine CEO Kim Joong-hyun announced immediate disciplinary measures: “We have accepted the resignations and suspended the duties of executives implicated in the allegations. To prevent recurrence, we are strengthening our internal control systems and reinforcing employee training on compliance and ethics.”
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
