South Korean financial regulators announced Friday that they were investigating nine executives from Samsung suspected of participating in insider trading during a merger of two subsidiaries. The probe began after the country’s stock exchange reported the suspected insider trading, said Kim Hongsik, director of the capital markets investigation unit at the Financial Services Commission, according to reports.

Samsung’s fashion unit Cheil Industries Inc. merged with the parent company's construction arm Samsung C&T Corp. in an all-stock deal worth 8.9 trillion won ($7.7 million) in July, according to Yonhap. A report by the New York Times, which cited local media, said that the executives bought up to 50 billion won ($43.1 million) worth of shares of Cheil before the merger. Cheil’s stocks were said to have risen steadily until May 26, when the merger was announced.

"We've probed the allegation. It's true that they bought Cheil Industries shares, but we found nothing illegal as their stock purchases were worth only 100 or 200 billion won," an official from Samsung said, according to Yonhap, adding: "They just engaged in normal stock investment. Some of them even don't know about the exact amount as they had entrusted their money to asset managers."

Samsung said in a statement, according to Bloomberg: “We understand the investigation involving certain individuals is still in its early stage. We will wait until the authorities conclude their investigation.”

According to a Bloomberg report, the deal was valued at $9.3 billion in May and the shares of Cheil, which has members from the founding Lee family as its majority shareholders, soared after the announcement. 

According to the Times, the merger drew attention because of a father-to-son transfer of power in the Lee family. Elliott Associates, a New York activist hedge fund, which had accumulated 7.12 percent of Samsung C&T before the merger, had opposed the deal. The hedge fund said the deal would be unfair to minority shareholders as it undervalued Samsung C&T shares in a bid to help Samsung Chairman Lee Kun-hee’s son Lee Jae-yong inherit the group's leadership.

The combined entity now has Samsung Electronics Vice Chairman Lee Jae-yong as the majority shareholder, the Washington Post reported.

The merger enabled Cheil to absorb Samsung C&T’s shares in other Samsung subsidiaries, including Samsung Electronics, further consolidating the family's influence over the entire group, according to the Times. The deal was approved by shareholders by a narrow margin in May.