"Stock Auto-Trading Program Guarantees Profit" Multi-Million Investment Fraud Suspended Sentence

Court: "1 year 8 months imprisonment with 3 years probation"

[Asia Economy Reporter Kim Daehyun] A man in his 50s who deceived investors into believing they could earn stable high returns by using a self-developed stock automatic trading program was sentenced to a suspended prison term.

According to the legal community on the 16th, Judge Lim Gwangho of the Seoul Central District Court Criminal Division 20 recently sentenced A (59, male), a pseudo-investment advisory operator indicted on fraud charges, to 1 year and 8 months in prison with a 3-year suspension.

Earlier, A was prosecuted on charges of defrauding a total of about 341 million KRW from six victims by operating a pseudo-investment advisory company in Dongjak-gu, Seoul, from February to September 2018, under the pretense that using the ELW (Equity-Linked Warrant) automatic trading program he developed would generate a fixed monthly return of 10-30%.

A introduced the program by saying it was "fully verified" and "automatically trades stocks according to target returns, so there is no risk at all," but investigations revealed it was an unfinished stage that had not undergone commercialization verification. The program only had functions to buy products as input and liquidate when the target return was reached, but lacked features to predict or analyze stock price volatility to avoid principal loss.

Most importantly, ELWs can incur principal losses due to asset price fluctuations and credit rating downgrades during trading, making it nearly impossible to generate fixed returns as A claimed. ELWs are securities that trade rights to buy or sell stocks at a predetermined price on a specified future date.

The prosecution judged that since A’s personal debt reached 600 million KRW at the time, he had neither the intention nor the ability to compensate the principal even if losses occurred. In court, A pleaded for leniency, saying, "I did not realize the program I developed would cause such problems. I will be more careful in the future."

The court stated, "Although the defendant’s crime and circumstances are serious," it also noted, "he shows remorse, has reached settlements with some victims who do not wish for his punishment, and considering other sentencing factors such as the defendant’s age, character, and environment, the sentence is determined."

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