Affiliate links on Android Authority may earn us a commission. Learn more.
WSJ: “President-level” Samsung executives investigated for insider trading
High-ranking Samsung executives are under investigation in South Korea for alleged insider trading involving shares worth up to $43 million.
Korea’s financial watchdog, the Financial Services Commission, is reportedly looking into suspicious market activity that occurred before the announcement of the acquisition of Samsung C&T by Cheil Industries, the Samsung group’s de facto holding company.
The investigation, which could take up to a year, was announced last Friday, and nine executives have been revealed to be under investigation. The Samsung executives belong to three or four of Samsung’s major companies. These persons are investigated for buying Cheil Industries stock worth $35 million-$43 million in the days before the acquisition of Samsung C&T was made public in May 2015. Cheil’s shares rose after the announcement.
According to the Wall Street Journal, citing a FSC official, other Samsung employees may be involved as well, including some “president-level” executives.
Samsung has around 60 affiliates, which are autonomous companies controlled by the Lee family through a complex web of ownership. Each of these structures has one or more president-level executives.
When Cheil Industries bought Samsung C&T, prevailing thinking was that the move was intended to give Lee Jae-yong, Samsung’s vice chairman, better control over Samsung Electronics, the all-important unit that makes smartphones, among other devices. Samsung C&T, a construction company, owns a part of Samsung Electronics.
Lee Jae-yong is seen as the heir to the Samsung empire. His father, chairman Lee Keun-hee, is yet to recover from a heart attack he suffered in 2014. By having Cheil buy C&T, Lee Jae-yong obtained control over 4.1% of Samsung Electronics.
To be clear, there are no public allegations against Samsung Electronics executives.
Still, this complication could, in theory, make it harder for the 47-year-old Lee Jae-yong to take on the reins of the massive conglomerate, which sells everything from clothes, to insurance, to cargo ships and mobile devices.
The leadership of Samsung Electronics is going through changes, following the company’s recent slowdown. Shin Jong-Kyun, who has led the mobile division through its rise and recent fall, will step back from day to day operations, though he will keep his co-CEO and president position. Taking over control is Koh Dong-Jin, who already warned about Samsung’s “tough year” ahead.