SEOUL, The chairman of a listed South Korean semiconductor company has been arrested for pocketing about 20 billion won (US$17.7 million) in illegal profits after manipulating the company's stock prices by spreading false information, prosecutors said Monday.

The Seoul Southern District Prosecutors' Office said the 54-year-old chairman of the Kosdaq-listed semiconductor company, identified only as Kim, was placed under arrest Friday on charges of violating the Capital Market Act.

Kim is accused of having jacked up his company's stock prices by leaking fabricated information on investments from China since late 2015, prosecutors said.

He is believed to have earned about 20 billion won in illegal profits, including unrealized ones, through the stock price manipulation, they noted.

According to investigators and market officials, the stock prices of Kim's company began to surge in November 2015 after a rumor circulated that the semiconductor firm pushed to build a Chinese factory and is poised to receive about 100 billion won in investment from China.

Around that time, a local media report alleged that a Chinese state-run enterprise has finalized a decision to invest in Kim's company, pushing up its stocks to the ceiling.

The rumors of a massive Chinese investment had steadily affected the semiconductor company's stock prices until the following year.

Prosecutors said Kim is also accused of violating the so-called 5 percent rule that regulates massive stock holdings.

Under the Capital Market Act, a listed company is obliged to report to the Financial Supervisory Service and the Korea Exchange within five days if the combined stake of a person and others with a special relationship exceeds 5 percent of its stocks.

Source: Yonhap News Agency