Financial Broker Gang Arrested and Indicted for Funding Corporate Raider Embezzling 71.8 Billion Won

Four People Each Received 500 Million KRW for Facilitating Rights Offering of Poorly Listed Companies

[Asia Economy Reporter Yoo Byung-don] A group of financial brokers who helped corporate raiders secure funding and pocketed hundreds of millions of won have been indicted while in custody.

On the 26th, the Seoul Southern District Prosecutors' Office Joint Investigation Team on Financial and Securities Crimes (Chief Dan Sung-han) announced that they have arrested and indicted A (57), a former director of a broadcasting production company, B (56), a former securities firm investment advisor, and two others on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (receiving bribes and breach of trust) and the Act on the Concealment of Criminal Proceeds.

They are accused of facilitating the procurement of approximately 67.5 billion won in total funding through loans and paid-in capital increases from financial institutions for two insolvent listed companies acquired by corporate raiders without capital, and receiving about 500 million won as a commission.

The corporate raiders who secured funding from them acquired the KOSDAQ-listed company S from May to August 2016, then inflated the stock price through false press releases and disclosures, embezzling approximately 16.1 billion won. They also earned about 7 billion won in illicit profits using the same method between February and May 2017.

Four members of the group, including Choi (56), are accused of embezzling about 8.9 billion won from company S between May 2016 and May 2019 to repay private loans, totaling 71.8 billion won in misappropriated funds. These corporate raiders were indicted on July 15 for embezzling approximately 71.8 billion won of company funds after acquiring the KOSDAQ-listed company without capital, which ultimately led to the company’s delisting.

Broker A facilitated a paper company of the insolvent listed company H to secure a 15 billion won loan from a savings bank in 2018 and received 165 million won as a commission. Additionally, in collusion with H’s management, A caused H to acquire shares of another insolvent company as a loan condition, resulting in about 800 million won in damages to H.

B and C (51) arranged for a securities firm to underwrite a 33 billion won paid-in capital increase for the insolvent listed company S and received 200 million won as a commission. D arranged for two securities firms to underwrite paid-in capital increases of 19.5 billion won and 33 billion won for two insolvent listed companies from 2016 to May 2018 and received about 130 million won.

The prosecution detected clues during the investigation of the corporate raiding cases involving the delisted KOSDAQ companies S and H and has been tracking A and others since August this year.

A prosecution official stated, "We have arrested all the financial brokers who undermined the transparency and soundness of the capital market and caused enormous damage to numerous general investors," adding, "We will continue to strictly respond to financial and securities-related crimes as the Financial Crime Special Prosecutors' Office."

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