South Korea’s Financial Supervisory Service (FSS) reported Dongbu Group Chairman Kim Jun-ki to the prosecution, charging him of illegal stock sales of 700 million won ($588,037) in his shareholdings in Dongbu Corp. using insider information ahead of the construction company’s file for court receivership.

The financial watchdog believes Kim saved about 300 billion won by unloading his shares two months before the company sought court receivership in late 2014. The higher decision-making Financial Services Commission (FSC) decided on Wednesday to refer Kim’s case to the prosecution for violation on duty of disclosure and insider trading at its 9th regular meeting.

Choi Eun-yeong, chairwoman of Eusu Hodlings Co. and former chair of Hanjin Shippinb Co. came under the same scrutiny last month for dumping the entire stake she and her daughters held in the shipping company before it filed for a creditor-led workout program.

FSS confirmed that Kim had a number of borrowed-name accounts to hold tens of billions of won worth of shares in Dongbu Corp., Dongbu Securities Co. and Dongbu Insurance Co. while conducting an investigation on the data it had received from the Korea Exchange last year. It also found that Kim illegally sold 620,000 shares, equivalent of 1.24 percent stake he held under a borrowed-name account to save around 270 million won just two months before the company had filed court receivership in December 2014 based on insider information.

Dongbu Group admitted that Choi had violated disclosure duty about the selling of the shares but denied the insider trading charges. “It’s unreasonable to assume that Kim sold his shares based on insider information after going through the painstaking self-rescue measures to revive the company,” said an unnamed official at the company. “All of sale proceeds also were spent to fund the restructuring,” he added.

By Choi Jae-won and Lee Gi-chang

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