Seoul, South Korea-based Samsung Group is under investigation for insider trading as company executives allegedly bought shares of Cheil Industries, the group’s textile firm, before its plan to purchase the group’s construction and trading arm Samsung C&T Corp was made public.
Suspicious trading picked up by the Korea Exchange prompted the Financial Services Commission’s investigation, according to a Wall Street Journal article,
Because the investigation is still in its early stages, a commission official speaking to the Journal on condition of anonymity said nine executives from multiple Samsung affiliates are suspected of buying 40-50 billion Korean won ($35-$43 million) worth of Cheil Industry shares in April and May.
Cheil Industries, which operates an amusement park in addition to the textile firm acquired Samsung C&T Corp for $8 billion and when the merger was announced on May 26, shares soared.
U.S. hedge fund Elliott Associate LP, a shareholder of Samsung C&T argued, however, that the $8 billion deal undervalued the company as its just its stake in Samsung Electronics had a $7.5 billion value.
Elliot tried to thwart the deal but it passed in a narrow vote at a July shareholders vote, the Journal reported. Now Elliot is trying to divest a portion of its stake in Samsung C&T.
Samsung Group has yet to comment beyond acknowledging it is aware of the investigation.