Allegations have been raised that fund managers at Samsung Active Asset Management bought stocks in advance of their inclusion in exchange-traded funds (ETFs) to seek improper profits, prompting South Korea's Financial Supervisory Service to launch an investigation.

On Sept. 16, financial authorities and the investment industry said the watchdog recently identified signs that some fund managers at Samsung Active Asset Management may have used material non-public information and is looking into the matter.

The Financial Supervisory Service is reportedly examining whether they identified stocks scheduled for inclusion in active ETFs, bought shares in advance through nominee accounts and later sold them to earn profits.

The allegations were reportedly detected as authorities reviewed a prior issue of information being disclosed in advance surrounding the listing in March of Samsung Active Asset Management's KoAct Kosdaq Active ETF.

At the time, Samsung Active Asset Management disclosed some stocks expected to be included in the ETF and their weightings while promoting the product ahead of its listing.

After information on the holdings became known a day before the ETF's listing, shares of some related stocks, including Qurient, Sungho Electronics and Padu, surged in after-hours trading that day.

Financial authorities have viewed it as possible that advance trading could occur if information on constituent stocks is made public before a new ETF is listed, and have been reviewing the need to refine related systems and rules.

They are also examining whether it could constitute unfair trading under the Capital Markets Act if information on holdings was delivered in advance to specific investors or trading took place using that information.

The watchdog's investigation is ongoing, and it has not been determined whether there was use of material non-public information or improper gains.

A Samsung Active Asset Management official said, "The Financial Supervisory Service has not conducted an on-site inspection, and we understand this is an extension of the March probe."