Financial regulator probes NCsoft over possible insider trading

SEOUL, June 21 (Yonhap) -- South Korea's financial regulator said Wednesday it has launched an investigation into online game company NCsoft Corp. over possible insider trading that took advantage of undisclosed information.

"We are looking into whether undisclosed information was used (in trading of NCsoft shares) as we have received some tips on NCsoft," an official at the Financial Services Commission said.

The probe came a day after investors short sold a record 196,256 NCsoft shares. The volume was far higher than the average daily short sale of 16,710 stocks in the January-May period.

Tuesday's short selling volume reached 18 percent of total trade volume, pushing down NCsoft prices. Short selling is an investment technique in which an investor borrows shares and immediately sells them in the hope that the price will drop so the investor can buy them back at the lower price.

NCsoft fell 11.41 percent on Tuesday amid rumors that the company will unveil "Lineage M" -- the mobile version of its mega-hit game "Lineage" -- without the so-called exchange function that allows users to buy or sell game items.

The decline in share prices raised suspicions of whether NCsoft Vice President Bae Jae-hyun sold 8,000 NCsoft shares, or 0.04 percent of the company's total shares, as he expected declines in the company's stocks.

The company said in a regulatory filing on Tuesday that Bae offloaded the shares last week.

On Wednesday, the game maker said in a regulatory filing that it has notified its intention to provide the exchange function in "Lineage M."

Yoon Jin-won, head of global communication at NCsoft, said Bae sold the shares to provide the money needed to exercise some of his stock options and he will hold more shares than he sold after he does so.

entropy@yna.co.kr
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