Three employees of South Korea’s Hanmi Pharm Co. and its holding company Hanmi Science Co. have been charged of abusing their access to undisclosed information on a milestone license contract cancellation in order to avoid losses from inevitable toll on stock prices.
Prosecutors had investigated whether Hanmi Pharm deliberately held back news that it had ended a partnership with German drug maker Boehringer Ingelheim to allow some investors time to sell their stock before the shares plummeted nearly 20 percent on Sept. 30.
About 20 people who allegedly received the information before public disclosure from the three employees were also caught and referred to financial authorities for further investigations. If they are convicted, this would be the first case of punishment on market order disturbance using undisclosed information.
About 300 minority shareholders of Hanmi Pharm already filed a compensation suit against the company, arguing they lost big from the company’s late public disclosure.
Prosecutors said on Thursday they asked a court to issue an arrest warrant to detain two Hanmi Science employees and one Hanmi Pharm employee on charges of using undisclosed information in violation of the Act on the Capital Market and Financial Investment Business.
The two workers of Hanmi Science’s legal team shared the news of a major contract cancellation with their families and friends, and sold Hanmi Pharm and Hanmi Science shares in advance to save losses. An employee at Hanmi Pharm’s HR team learned the information from one of the two Hanmi Science workers and also acted in advance. Their acquaintances shared information through social media, text messages and phone calls, according to the prosecution. In addition to the three employees, some 20 people who received the information from them are expected to be booked under criminal charges.
Financial authorities said they will further investigate the suspects based on the prosecution’s evidence and if their charges are upheld, they can be fined, which would be the first case of punishment on market order disturbance using undisclosed information. Prosecutors said they are also probing the allegations that a group of short-selling investors were involved in the case.
By Bae Mi-jung and Yoo Tae-yang
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]