FNC Entertainment released the result of prosecutor’s investigation regarding the charges of Jung Yonghwa and Lee Jonghyun’s purchase and profiteering with undisclosed information about a famous celebrity’s signing.
Through a press release, FNC announced, “Jung Yonghwa, Lee Jonghyun, and the associates of FNC actively cooperated to the prosecutors’ investigation. As a result, Seoul South Prosecutors’ office concluded ‘free of charge’ to Jung Yonghwa as misunderstanding regarding his charges have been resolved, and ‘summary indictment’ to Lee Jonghyun.”
Following is the full text of their press release.
1. Summary of Prosecutor’s investigation and charges
Our signed artists, CNBLUE’s member Jung Yonghwa and Lee Jonghyun, were investigated by Seoul South Prosecutors’ Office financial investigation department since last May for acquisition of FNC entertainment’s shares using ‘undisclosed information regarding a famous celebrity’s contract’.
2. Prosecutor’s measures on Jung Yonghwa: charge dropped
The charge on Jung Yonghwa was that he became aware of the undisclosed information in early July 2015 and used it to buy approximately 400 million-won worth of FNC entertainment’s stocks, earning 200 million-won’s worth of unfair profits. But with detailed proof, he explained the following circumstances which led to the charges being dropped from the prosecutor’s office.
Prior to the public offering of the company in February 2014, Jung Yonghwa had signed an incentive contract with a format similar to stock option with FNC. With the cash received according to the contract, he obtained FNC entertainment’s stocks in early July of 2015. But at the time of the acquisition, the negotiations for the celebrity’s signing was not in process. Jung Yonghwa purchased FNC’s stocks without knowing the information about the contract.
Also, Jung Yonghwa had always delegated the management of his property to his mother. Aforementioned dealings that became problematized were all bought and sold in actuality by his mother. At the time of transaction, Jung was not even aware of the shares being bought under his name. But following the purchase of the stocks, when the said celebrity’s contract news was reported on July 16, Jung Yonghwa’s mother who does not have experience in stock investment saw that the share prices rose high and partially sold the owned shares. It was in no way an attempt to realize profit from the information about popular celebrity’s signing.
Jung Yonghwa explained this fact in detail with proof to the Prosecutor’s office, which led to the charges against him being dropped.
3. Prosecutor’s measures on Lee Jonghyun: Summary Indictment, fined 20 million won
It is a fact that Lee Jonghyun purchased FNC entertainment’s shares, upon hearing from an acquaintance in early morning of July 15 about the “popular celebrity’s contract information” without confirming that it was reported in the news that morning.
Such a purchase is derived from Lee’s ignorance about the law, and after recognizing that such transactions are problematic legally, he intentionally did not sell off the shares and maintained his ownership until now, rather taking losses.
Today, the Prosecution considered his deep self-reflection on creating a societal disturbance, gave him the lightest ‘summary indictment’ charge.
4. FNC entertainment’s position and future plans
Due to our poor management, it resulted in prosecutors’ investigation and summary indictment on some of our artists. We wish to truly and deeply apologize.
But there is no direct involvement of our agency or our staff in usage of undisclosed information. Some of the reports by media about us being investigated for the block deal is not true.
In regards to this incident, we will improve our internal system and regularly educate our staff and artists so that such offense will not recur in the future.