Late LG chairman's daughter accused of insider trading, case sent to prosecutors

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Late LG chairman's daughter accused of insider trading, case sent to prosecutors

Published: 03 Oct. 2024, 18:57 Updated: 03 Oct. 2024, 19:00

SHIN HA-NEE
shin.hanee@joongang.co.kr

LG Welfare Foundation chief Koo Yeon-kyung, the eldest daughter of the late LG Chairman Koo Bon-moo, gives out a donation certificate during a ceremony in western Seoul on April 19, 2022. [LG GROUP]

The Financial Services Commission (FSC) decided to inform prosecutors of alleged stock trading using nonpublic information by Koo Yeon-kyung, the eldest daughter of LG’s late chairman.

The decision was made on Wednesday by the Securities and Futures Commission, a sub-commission under the FSC.

When the FSC sends a case to an investigative agency, it does not automatically require the agency to launch an investigation. This is unlike when a case is formally reported, which compels the prosecution to investigate.

The prosecution will look into the allegation before deciding whether to launch a formal investigation into Koo.

The trade was initially found by the Financial Supervisory Service (FSS), which referred the case to the FSC for the decision.

Koo currently runs the LG Welfare Foundation. She has been accused of violating the Financial Investment Services and Capital Markets Act by using nonpublic information to acquire 30,000 shares of an unnamed biotech company last year.

The Kosdaq-listed company, which develops rare disease treatments, issued an electronic disclosure in April last year notifying that it raised 50 billion won ($37.5 million) from BRV Capital Management through a rights offering.

Koo’s husband Yoon Kwan, who is the chief investment officer of BRV Capital Management, has made the investment decision.

The share price of the company soared 16 percent when the electronic disclosure was filed. Koo purchased the company’s shares ahead of the announcement, allegedly using the information before it was publicly filed.

If found guilty, Koo may face a minimum sentence of one year or a fine of three to five times the profit earned by the trading.

Koo attempted to donate the shares to the LG Welfare Foundation when the allegation first surfaced in May last year but failed, as the foundation’s board suspended the proposal.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]