July 14, 2009 / 6:36 AM / 11 years ago

UPDATE 1-S.Korea's OCI denies report on chairman being probed

* OCI chief suspected of insider trading, says media report

* OCI spokesman denies report, says will take legal action

* Financial regulator declines to give details

* Shares fall 13 pct earlier, then trim losses

SEOUL, July 14 (Reuters) - South Korean polysilicon maker OCI Co Ltd (010060.KS) denied a report in Maeil Business Newspaper that its chairman was being investigated for suspicion of insider trading by financial regulators and prosecutors.

“Report is totally false. Our chairman has not been investigated, nor has been told he will be investigated for (insider trading),” an OCI spokesman said, adding that the company plans to take legal action against the newspaper.

South Korea’s regulatory Financial Supervisory Service said “a broader investigation on unfair stocks-trading is progressing, but we cannot say whether the chairman of OCI has been involved or not.”

The Maeil Business Newspaper reported on Tuesday that OCI chairman was being suspected of insider trading among other “unfair stock dealings”, such as buying company stocks in 2008 before the company submitted regulatory filings on winning overseas orders.

OCI shares trimmed losses after falling as much as 13 percent earlier on Tuesday but were still down 8 percent by 0552 GMT in strong volume of nearly 1.3 million, a 13-week high, while the broader market .KS11 rose 0.8 percent.

“Unless the financial regulator and prosecutors make official statements turning upside down the allegations made in the report, shares will not likely recover soon,” said Park Dae-yong, an analyst at Hyundai Securities, adding that allegations made in the report prompted investors’ distrust. (Reporting by Jungyoun Park; Editing by Muralikumar Anantharaman)

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