Prosecutors probe Rainbow Robotics over insider trading as fines, criminal charges loom

"I made 800 million won." (front-running tied to Netflix partnership)

"I made over 1 billion won." (Rainbow Robotics insider)

Prosecutors are conducting an intensive investigation into Rainbow Robotics, a robotics company whose share price once surged more than 90 times from its initial offering price of 10,000 won (about $7), on suspicion of unfair trading.

A large penalty has also been imposed on a person who bought shares after learning in advance of the company's strategic partnership with Netflix, reaping illicit gains of around 800 million won ($580,000).

Those who engage in front-running — buying shares ahead of the public using inside information — face not only heavy fines but potentially criminal liability.

Prosecutors carried out additional search-and-seizure operations at Samsung Electronics' headquarters, following an earlier raid on Rainbow Robotics' offices. They are also investigating Samsung Electronics employees suspected of trading on inside information, in addition to Rainbow Robotics insiders.

The Financial Services Commission's Securities and Futures Commission had earlier referred the case to prosecutors after finding that Rainbow Robotics insiders used undisclosed information to obtain illicit gains. The suspects are accused of using internal information during Samsung Electronics' acquisition of a stake in Rainbow Robotics between 2022 and 2024 to pocket more than 1 billion won ($720,000) in illegal profits.

The stock market in the Kospi 8000 era [Photo, Herald DB]

Rainbow Robotics listed on the Kosdaq in 2021 and went largely unnoticed for years, with its share price stuck near its offering price of around 10,000 won. That changed as robotics gained recognition as a future growth industry and Samsung Electronics moved to acquire the company, sending the stock soaring as much as 90 times its original price. The surge set off a frenzy among retail investors, with many boasting they had bought in at 100,000 won or 200,000 won a share.

Prosecutors believe some of those involved borrowed money or tipped off acquaintances to amplify their illicit gains.

Separately, the Financial Services Commission's Securities and Futures Commission fined a former SBS employee 1.04 billion won ($750,000) for buying company shares after learning in advance that SBS would sign a strategic content supply partnership with Netflix, netting around 850 million won ($615,000) in illicit profits. A family member who received the tip and also bought shares was fined an additional 39.4 million won ($28,500).

The former employee used undisclosed information about the pending Netflix partnership to buy and then sell SBS shares, earning approximately 850 million won in illegal gains.

The government said it would track down and recover all illegal profits from unfair trading, sending a clear message to the market that stock price manipulation leads to ruin.

President Lee Jae Myung also weighed in Saturday, posting on his X (formerly Twitter) account to warn journalists against front-running. "Stop the stock manipulation that leads to your own ruin, and return to being a proper journalist who writes with integrity," he wrote.

Lee urged anyone already involved to come forward. "If you have already done it, turn yourself in — whistleblowers receive reduced penalties and reward payments," he said.

park@heraldcorp.com