[Edaily Reporter Kim Jinsoo ] ABL Bio Inc.(298380) As news spreads that CEO Lee Sang-hoon’s family is also implicated in allegations of trading based on insider information, anxiety is growing among shareholders who invested in ABL Bio Inc. with confidence. While concerns about a trading suspension are emerging amid the continued decline in the stock price, the likelihood of such a suspension appears limited.

In particular, regardless of whether trading is suspended, a leadership vacuum could arise depending on whether CEO Lee provided inside information; therefore, the focus of this investigation is expected to be on whether CEO Lee was “involved.”

According to industry sources on the 16th, the Joint Task Force to Eradicate Stock Price Manipulation—comprising the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange—detected evidence of ABL Bio Inc. officials engaging in insider trading and conducted raids on eight locations, including ABL Bio Inc.’s headquarters. The fallout appears to be growing as it has been reported that CEO Lee’s family members are also among those under suspicion.

According to the Joint Task Force and other sources, these individuals are suspected of having obtained more than 1 billion won in illicit gains by using undisclosed information around the time of large-scale technology export agreements signed with GSK in April and Eli Lilly in November of last year. It is reported that the Joint Task Force is currently investigating how the information was obtained and the extent of their involvement in the transactions.

Risk of Trading Suspension

: As news spreads that the CEO may have been involved in these transactions using undisclosed information, market attention is focused on whether ABL Bio Inc.’s trading will be suspended; however, analysis suggests it is unlikely that trading will actually be suspended.

According to the Korea Exchange’s KOSDAQ Market Regulations, the primary grounds for trading suspension include “designation as a managed stock,” “occurrence of grounds for delisting or a substantive review of listing eligibility,” “inadequate disclosure,” and “failure to respond to an inquiry.” In other words, the mere use of non-public information by an officer, employee, or their family member does not automatically lead to a trading suspension.

The use of non-public information is considered an individual’s misconduct, and the impact on the company or legal entity is limited. If an individual uses information obtained for their own stock trading, punishment is limited to that specific individual. In fact, in past cases involving ECOPRO CO., LTD, SEOULBROADCASTINGSYSTEM, and HYBE, where executives and employees used insider information to trade stocks for profit or to avoid losses, only the individuals were punished; none of these cases led to a trading suspension.

However, if issues such as intentional delays in disclosures to facilitate trading or false or incomplete disclosures of material information are identified during the investigation, this may lead to a substantive review of listing eligibility and a trading suspension.

CEO Lee’s Involvement Is Key

The use of non-public information constitutes unfair trading under the Capital Markets Act. If an executive or employee uses non-public information obtained in the course of their duties directly for trading, or allows others—such as family members—to use it, the perpetrator faces criminal penalties or administrative fines. A crucial point to note is that not only the direct use of non-public information for trading but also allowing others to use it is subject to punishment.

Accordingly, whether CEO Lee provided important information to his family and allowed them to use it is expected to be the key factor in determining liability. If it is confirmed that CEO Lee provided contract-related information to his family and allowed them to use it for trading, he, as the provider of the information, could also face penalties. However, if CEO Lee’s family obtained the information through other channels and traded based on their own judgment, CEO Lee would bear no legal liability.

Accordingly, the Joint Response Team is expected to focus its investigation on when and to whom the contract information was disclosed, whether CEO Lee was aware of his family members’ trades, and whether he issued trading instructions or provided funds.

If CEO Lee’s involvement is confirmed, the issue of whether he can retain his position as CEO will arise, separate from any criminal penalties. Under the Capital Markets Act, which took effect in April of last year, the Financial Services Commission mandates that the appointment or reappointment of executives at listed companies who engage in unfair trading practices be restricted for up to five years. If an executive already in office falls under this restriction, that executive must be dismissed without delay.

The reason CEO Lee’s future is so critical lies in his role within the company. He is a co-inventor of the patents related to GrabBody-B, the core technology of ABL Bio Inc. Furthermore, CEO Lee has personally overseen lengthy discussions with big pharma and successfully negotiated contracts. Under these circumstances, if restrictions are placed on CEO Lee’s management activities—whether due to his dismissal or criminal proceedings—it could create burdens for subsequent technology export negotiations, communication with partner companies, and the determination of R&D priorities.

In this regard, ABL Bio Inc. stated, “Our existing partnerships remain solid, and our ongoing R&D efforts and search for new partnership opportunities are proceeding smoothly.”

Specifically, the company maintains that efforts to secure a new technology export deal for GrabBody-B, the expansion of next-generation platforms such as siRNA, and R&D collaborations with GSK Holdings and Lilly are all proceeding smoothly. Furthermore, the company announced that it plans to present clinical data on its immuno-oncology pipeline candidates, ABL111 and ABL503, at the European Society for Medical Oncology (ESMO) Congress scheduled for this October.

ABL Bio Inc. stated, “We will cooperate fully with the investigation and do our utmost with a sense of responsibility toward our core business of new drug R&D and business development. We will repay our shareholders’ trust through future business results.”