Exclusive: Meritz Fire executives face insider trading charges over merger

Senior leaders accused of profiting from undisclosed restructuring plans

South Korea’s financial authorities filed criminal complaints on July 16 against current and former executives at Meritz Fire & Marine Insurance for allegedly using undisclosed merger information to profit from stock trades—part of a widening crackdown on capital markets violations under the Lee Jae-myung administration.

Among those sanctioned is a former president of Meritz Fire, who has since been removed from his post by parent company Meritz Financial Group. The company confirmed it had taken disciplinary action following the investigation.

Meritz Financial Group headquarters in Seoul./Meritz Financial Group

The Securities and Futures Commission (SFC), under the Financial Services Commission, reffered the former president and a senior executive to prosecutors for violating the Financial Investment Services and Capital Markets Act.

In November 2022, Meritz Financial announced a three-way merger that would bring its listed subsidiaries—Meritz Fire & Marine Insurance and Meritz Securities—under full ownership. The company would issue new shares to absorb the subsidiaries, which were later delisted. It also unveiled a major buyback and retirement of treasury shares.

The restructuring announcement triggered a sharp rally in all three firms. Meritz Financial’s shares surged from around 26,000 won to the upper limit of 34,750 won the following day. Meritz Fire rose from 35,000 won to 46,400 won, and later peaked near 56,000 won.

According to regulators, some Meritz Fire executives, including the former president, acquired large volumes of Meritz Financial stock shortly before the merger announcement, then sold their holdings soon after at a profit. The gains are said to have reached hundreds of millions of won.

Though the executives claimed the trades were unrelated to the merger, the investigation found that family accounts were used in the transactions, suggesting advance knowledge of the restructuring plan. Authorities concluded the trades warranted criminal prosecution.

“A higher standard of ethical conduct is expected of senior executives at financial institutions,” an official said. “The severity of these violations called for decisive enforcement.”

Meritz Financial said in a statement, “The individuals involved have been appropriately disciplined. We deeply regret the incident and will take all necessary measures to prevent recurrence.”

Bang Si-hyuk, chair of Hybe’s board./News1

Also on July 16, the SFC referred Hybe board chair Bang Si-hyuk to prosecutors for alleged fraud tied to the company’s IPO. Regulators say Bang misled existing shareholders about listing plans while structuring a private deal to benefit from the eventual float.

Before Hybe’s 2020 IPO, Bang allegedly struck an agreement with a private equity fund—established by former Hybe executives close to him—entitling him to 30% of profits from the fund’s post-IPO sale of Hybe shares. At the same time, he is said to have told other shareholders that the company had no listing plans, prompting them to sell shares to the fund at above-market prices.

When the IPO went ahead, the fund sold its shares at a significant profit. Bang reportedly received around 200 billion won through the arrangement.

Regulators concluded the conduct constituted fraudulent and unfair trading under the Financial Investment Services and Capital Markets Act.