Supreme Court Confirms Guilt of 'Lime Investment Firm Stock Manipulation' Group... Main Perpetrator Partially Acquitted, Case Remanded

Supreme Court Grand Bench.
Photo by Supreme Court

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The group that manipulated the stock prices of KOSDAQ-listed companies funded by Lime Asset Management (Lime) funds to gain huge illegal profits has been sentenced to heavy penalties.

However, the main perpetrator, Mr. Lee, and one accomplice will face retrial after the Supreme Court acquitted them of some charges under the Capital Markets Act and remanded the case.

The Supreme Court’s First Division (Presiding Justice Kim Seon-su) confirmed the original verdict on the nine members of the no-capital mergers and acquisitions (M&A) group, who were indicted for violating the Capital Markets Act and sentenced to up to six years in prison and fines up to 3 billion won on the 13th.

The court stated, “There is no error in the original judgment that violates logic and the rules of experience, exceeds the limits of free evaluation of evidence, or affects the judgment due to misinterpretation of law, omission of judgment, contradictory reasons, or insufficient reasoning,” thus dismissing the appeal.

However, the Supreme Court acquitted the main perpetrator, Mr. Lee, and one other accomplice of some charges under the Capital Markets Act, for which they were detained and indicted, and sentenced to 12 years in prison and a fine of 3 million won in the second trial, and sent the case back to the Seoul High Court.

The court explained, “The joint principal offender of the Capital Markets Act violation for failure to report large holdings or changes in stocks, which is a crime of commission by omission (a crime that can only be established by omission of a specific obligatory act), can be established when the obligation is commonly imposed on multiple persons and all fail to fulfill it in conspiracy. However, Mr. Lee is not a person obligated to report large holdings or changes in stock A, so joint principal offender liability under Article 445, Clause 20 of the Capital Markets Act cannot be established.”

Mr. Lee and others were indicted on charges of acquiring the auto parts company “Esmo Materials,” which received Lime fund money, through a paper company without capital from July 2017 to March 2018, then manipulating the stock price by leaking information about new business ventures to reap huge profits.

They were also charged with repeatedly failing to disclose large stock holdings reports.

They reportedly attracted attention by recruiting foreign politicians and entrepreneurs, fabricated favorable information by pretending to conduct business with overseas institutions, and manipulated stock prices by conducting numerous price-adjusting transactions using nominee securities accounts created under acquaintances’ names.

The Lime fund invested over 10 billion won in Esmo by purchasing convertible bonds (CBs) issued by the company and is known to have invested large sums in other KOSDAQ-listed companies acquired through Esmo.

In the first trial, the court sentenced Mr. Lee to 12 years in prison and a fine of 180 billion won, stating, “Mr. Lee and others gained huge illegal profits through organized crimes such as price manipulation and fraudulent transactions.”

However, the second trial acquitted some charges that were found guilty in the first trial and significantly reduced Mr. Lee’s fine to 30 billion won.

At that time, the court stated, “The defendants gained astronomical trading profits through their crimes but caused great losses to numerous unspecified investors. Considering the meticulous pre-planning and the division of roles among many, even defendants who only carried out some of the acts cannot be lightly judged.”

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