It has just been reported that prosecutors have started investigation into a major entertainment company that is publicly traded on KOSDAQ after clues hinting at stock manipulation were revealed.
Recently, the agency located in Gangnam underwent a search and seizure by the Seoul District Prosecutor’s office.
According to the exclusive report by MBC, this company saw a great deal of success with their idol groups, and went public on KOSDAQ in 2014.
In July of last year a famous MC signed to the label, skyrocketing the share value of the company to 27,000 KRW (about $25 USD) per share.
Around that time, a representative of the company (in the report labeled “Mr. A”) sold off 1.1 million shares in massive blocks to 10 institutional investors at a value of 235 billion KRW (about $204 million USD).
According to the report, the block deal sale of shares was made by Mr. A just prior to the signing of the famous broadcast personality in July in order to reduce the market impact of the massive stock exchange, earning the investors who participated in the block deal over 10 billion KRW (about $8.7 million USD) in extra profit each.
This sale of stock cut out other potential investors, and further undercut the stock price by about 400 KRW (about $0.40 USD) per share.
In other words, a handful of investors got tipped off that the company was going to sign a hugely famous celebrity and got a slightly cheaper share price in exchange for committing to a massive investment.
Though it has yet to be confirmed by the company itself, many suspect that the “major entertainment company” referred to in the report is FNC Entertainment due to the two major events listed in the report: 1) the company went public in 2014, and 2) FNC signed one of Korea’s most popular MCs, Yoo Jae Suk, in July of last year.
There’s also the fact that the TV news report that broke this story, though blurring out the name of the company on the wall, quite obviously filmed their segment at FNC Entertainment.
This story is sure to unfold in more detail over the next few days, and MoonROK will have all the details as it does so be sure to stick around.
Source: MBC News
Tags: FNC Entertainment