Seoul National University Club's 'Information Cartel' Pocketed 20 Billion Won by Working as a Tight-Knit Group

[Financial News] A group that used nonpublic information obtained through their work in the financial sector to reap illicit gains worth around 20 billion won has been caught by financial authorities. All five key suspects were graduates of a Seoul National University business club, and investigators found that they had formed an 'information cartel' and shared information over an extended period.

The Joint Task Force for Eradication of Stock Price Manipulation, comprising the Financial Services Commission (FSC), the Financial Supervisory Service and the Korea Exchange (KRX), announced on the 29th that it had uncovered a group—including private equity fund managers and listed-company officials—that used nonpublic information to reap illicit gains. It also conducted searches and seizures at some 20 locations, including the suspects' homes and offices.
According to the authorities, around five key suspects, all in their 30s or 40s, became acquainted while participating in a Seoul National University business club and working at a global consulting firm.
They later moved to private equity firms and listed companies, where they served as executives and handled mergers and acquisitions (M&A)-related work, including tender offers.
Investigators found that, over the past five years, they had repeatedly shared favorable nonpublic information about five stocks obtained through their work with one another, as well as with family members and acquaintances.

They allegedly made more than 20 billion won in illicit gains by buying the relevant stocks at low prices and selling them at higher prices after the information was disclosed and the stock prices rose.
The Joint Task Force first identified suspicious accounts displaying patterns of trading on nonpublic information during the market-surveillance stage. It then traced the connections among the traded stocks and the people involved.
The authorities combined cases in which the same suspects were repeatedly involved and conducted an in-depth analysis. They have also been coordinating their investigation with relevant agencies since May.
A Joint Task Force official said, "We have been investigating for two years. By expanding the scope through extensive fund tracing, trading analysis and investigations into personal relationships, we confirmed the connections among the individuals. Through the searches and seizures, we will establish the facts and verify whether the evidence matches the statements."
Authorities consider the case serious because the sharing of nonpublic information was repeatedly carried out over an extended period within a secretive information cartel, and because M&A professionals bound by strict confidentiality obligations were the source of the information.
The Securities and Futures Commission (SFC) has currently frozen the securities accounts holding the funds under the Financial Investment Services and Capital Markets Act to prevent the suspects from concealing their illicit gains.
[email protected] Ahn Ga-eul Reporter