Nexon founder summoned as suspect in insider trading scandal

[THE INVESTOR] Prosecutors on July 13 summoned Kim Jung-ju, founder of the nation’s largest game company Nexon, on suspicions that he gave insider information to a senior prosecutor to help him gain illegal stock gains.

The prosecutors said they will question Kim on whether he had leaked information about the stock market debut of Nexon Japan to Jin Kyung-joon, a prosecutor who is also his college friend.

Jin had bought 10,000 unlisted Nexon shares in 2005 on loans from Nexon for below the market price.

He then sold the stocks at more than double that price to Silverstone Partners, a paper company belonging to the Nexon founder.

With the proceeds, Jin went on to buy 80,000 Nexon Japan stocks, also unlisted at the time. Nexon Japan was established by Kim in 2002, and it acquired Nexon’s Korean operations in 2005.

Later in 2011, the value of Nexon Japan stocks skyrocketed by more than 100-fold when it was listed in Japan.

In 2015, Jin sold his Nexon Japan stocks to rake in 12.6 billion won (US$10.98 million) profit.

Jin had initially claimed that he bought the Nexon stocks out of his own pocket. Later, when questioned by the Government Public Ethics Committee, he said some of the money had come from his mother-in-law.

On July 12, the prosecutors raided the offices of Nexon in Pangyo and Jejudo Island alongside the residences of Jin and Kim. The chairman has been placed under a travel ban.

Earlier, Kim was accused by a nonprofit watchdog, SpecWatch, of embezzlement and dereliction of duty. The watchdog claimed that the chief caused a loss of 2.8 trillion won to the game company by selling Nexon Korea to Nexon Japan.

By Shin Ji-hye and Kim Ji-hyun (shinjh@heraldcorp.com)