Kosdaq Listed Company’s No-Capital M&A, Gang Indicted for 10 Billion Won Illegal Profits

[Asia Economy Reporter Yoo Byung-don] A group accused of acquiring a KOSDAQ-listed company through a no-capital merger and acquisition (M&A), colluding with securities firm employees to make false disclosures and reports, obtaining unfair profits of over 10.6 billion KRW, and embezzling company funds worth around 30 billion KRW has been brought to trial.

The Seoul Southern District Prosecutors' Office Financial Investigation Division 2 (Chief Prosecutor Kim Rak-hyun) announced on the 14th that it has arrested and indicted B (54), vice chairman of bio company A, CEO C (51), and E (52), the actual owner of company D, on charges of violating the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes, including embezzlement and breach of trust.

According to the prosecution, in July 2019, they acquired company A through a no-capital M&A using private loan funds, then falsely disclosed information regarding the source of acquisition funds, issuance of convertible bonds and bonds with warrants, and made false reports suggesting large investments in overseas bio companies to boost the stock price, thereby obtaining unfair profits of 10.6 billion KRW.

They are also accused of embezzling 12.8 billion KRW of company A’s funds and breaching trust by 7.5 billion KRW from August to December of the same year, purportedly to repay the private loan funds borrowed for acquiring company A.

E is also charged with using 7.7 billion KRW of convertible bonds paid to company J between November 2019 and January 2020 for personal purposes, together with B.

Additionally, F (38), who worked as a team leader in the TRS operations department of a major securities firm, is accused of planning and designing a financial structure using total return swaps (TRS) and executing 60 billion KRW of securities firm funds, despite knowing about the false disclosures made by company A’s executives and employees.

When arrest warrants were requested, three others?G (49), a former gang leader who provided lodging and burner phones to the fugitives, H (52), a nightlife establishment owner, and I (46), unemployed?were also charged with aiding fugitives and brought to trial without detention.

The prosecution stated, "Executives and employees of company A used private loan funds to acquire a sound KOSDAQ-listed company through a no-capital M&A and leaked large amounts of listed company funds to repay the private loans. Employees of a major securities firm assisted them. Going forward, the Seoul Southern District Prosecutors' Office, as a financial crime investigation agency, will strictly respond to no-capital M&A offenders, those disrupting capital market order, and their protectors."

Meanwhile, bio company A is related to Kim Bong-hyun (43), chairman identified as the main culprit in the Lime scandal. Its stock trading was suspended two to three times but resumed normally after changing its name last December. Company E is also a gene analysis firm traded on KONEX, a market for trading stocks of small and medium enterprises.

This content was produced with the assistance of AI translation services.