Mezzanine, Pre-IPO & SPACs

What kinds of cases have there been of privately placed convertible bonds being abused for unfair trading?

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In the targeted investigation into unfair trading exploiting privately placed convertible bonds that the Financial Supervisory Service announced in 2023 (40 cases investigated), 32 of the 40 cases involved suspected fraudulent trading in which the share price was pushed up through false announcements of entry into a fashionable theme business or by feigning large-scale investment, after which the converted shares were sold at high prices.

Cases were also found of concealing the provision of collateral or the use of borrowed funds, disclosing issuances with no realistic prospect of payment, and hiding the real acquirer through investment partnerships and the like (27 of the 40 cases). If a company frequently discloses convertible bond issuances or keeps announcing new businesses, it is worth carefully checking how the funds are used, who the acquirers are and whether payment was actually made.

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This answer is general financial information as of 14/10/2026, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.