A company CEO sold all his shares after learning about an impending adverse audit opinion, prompting the Financial Supervisory Service to enhance monitoring of unfair trading during financial reporting periods.
A CEO and largest shareholder of a listed company acted on insider information regarding a likely adverse audit report due to the company’s financial difficulties. Before this information was publicly disclosed, he sold his shares through both personal and nominee accounts to avoid significant losses. This instance highlights ongoing issues with market manipulation and insider trading during financial reporting periods, prompting regulatory bodies to reinforce vigilance against these practices.
The Financial Supervisory Service (FSS) indicated that unjust trading practices linked to undisclosed negative information frequently occur around the time of financial statements. The FSS revealed that it will focus its surveillance efforts on companies showing warning signs, including adverse audit opinions and delayed reporting. In analyzing unfair trading incidents related to financial statements over the past three years, it was found that the majority occurred in the first quarter, suggesting a pattern of exploitation of inside information prior to the public release of audit findings.
The focus of investigations often centers on top executives and majority shareholders using non-public information to either avoid trading losses or to manipulate market conditions before financial reports are disclosed. Among the 68 individuals connected to these trades, 57 were insiders, with a significant number being executives. The FSS is pushing for accountability by filing charges against 66 of these individuals and emphasizes the need for awareness against the manipulation of stock prices during sensitive financial reporting periods, which can heavily influence investor trust and market stability.
