Two former employees of the law firm (Yoo) Kwangjang were sentenced to prison for trading stocks based on insider information obtained from unauthorized access to lawyers' emails. While some charges related to insider trading were dropped, resulting in reduced fines and restitution, the court emphasized the severity of their actions.
On July 31, the Seoul High Court's Criminal Division 3, led by Judge Lee Seung-han, sentenced former employee A to three years in prison, a fine of 2.96 billion won (approximately $2.2 million), and restitution of about 983.56 million won (approximately $740,000). Co-defendant B received a three-year prison sentence, a fine of 1.58 billion won (approximately $1.2 million), and restitution of about 523.4 million won (approximately $400,000).
A had initially been sentenced to three years and six months in prison, along with a fine of 6 billion won and restitution of 1.82 billion won in the first trial, but the appeals court reduced all penalties. B's prison sentence remained the same, but fines and restitution were also reduced. The court revoked their bail status during the appeal.
The court stated, "The defendants' actions severely undermined the fairness, reliability, and soundness of the capital market, as well as public trust in law firms and legal services. Even if they obtained the information through their positions, they should have recognized that using it for personal gain was unacceptable, yet they committed the crimes without any remorse, indicating a serious moral failing."
However, the court overturned some of the original findings. It ruled that the evidence for certain insider trading charges related to corporate tender offers was insufficient to establish guilt beyond a reasonable doubt. Additionally, it found that A's method of obtaining some insider information was not adequately proven, and it assessed the timing of B's acquisition of insider information differently than the lower court.
As a result of these findings, the court adjusted the fines and restitution amounts to reflect the reduced scope of the unjust enrichment.
A and B, who worked in the IT department of Kwangjang, were charged with unauthorized access to email accounts and document management systems of lawyers and secretaries from September 2021 to December 2023. They allegedly used insider information from consulting firms regarding tender offers, capital increases, and stock transfer contracts to trade stocks. Investigations revealed that A profited approximately 1 billion won (about $750,000) and B about 500 million won (about $375,000) by trading shares of five companies, utilizing family accounts and loan funds.
In a related case, the same court also issued rulings on three individuals, including former employee C of MBK Partners' fund management company, MBK Special Situations (SS), for violations of capital markets law.
C was sentenced to one year in prison, suspended for two years, and fined 30 million won (approximately $22,500) for using or sharing insider information obtained from tender offer preparation meetings and investment materials. The other two defendants, who traded stocks based on the information received, received sentences of six months and eight months, respectively, both suspended for one year, reflecting some reductions from the first trial. The court noted that C did not directly profit from the crime and that the recipients of the information did not actively seek the insider information.
* This article has been translated by AI.
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