Busan District Prosecutors' Office Uncovers 180 Billion KRW Illegal Trading in Over-the-Counter Stock Market

[Asia Economy Reporter Kim Daehyun] The head of a company and related parties have been brought to trial on charges of fraudulent trading involving stocks worth approximately 180 billion KRW by falsely promoting battery-related technologies in the over-the-counter stock market (K-OTC).

[Image source=Yonhap News]

On the 16th, the Anti-Corruption Investigation Division of the Busan District Prosecutors' Office (Chief Prosecutor Park Hyunkyoo) announced that it had indicted A (56), the CEO of an unlisted company, along with 10 employees from three corporations on charges of violating the Capital Markets Act.

A, who is the representative of three corporations connected to the battery business, and others are accused of falsely promoting that they possessed proprietary technology, patents, and a mass production system for high-performance batteries, thereby obtaining unfair profits worth approximately 81.5 billion KRW.

They were investigated for falsely promoting that the company had a so-called 'value chain' physical and technical system for battery mass production, ranging from materials and components to finished products, including refining steel byproducts, which are waste, based on proprietary crushing technology to manufacture graphite sheets.

Through this, from March 2018 to November last year, they sold 21.26 million shares of three companies to 18,595 people for 187.4 billion KRW and obtained unfair profits worth approximately 81.5 billion KRW, according to the prosecution's assessment.

Although they promoted that they had a mass production system for batteries from materials to finished products, it was found that they merely rode the wave of the rapidly growing secondary battery industry centered on the electric vehicle market and had not even completed technology development. Exploiting the regulatory blind spots in unlisted stock trading, they packaged themselves as leading the advanced industry through false and exaggerated promotions and sold stocks via unauthorized financial investment firms, thereby pocketing large amounts of unfair profits.

In particular, one corporation recorded consecutive daily upper price limits immediately after the commencement of over-the-counter stock market trading on April 19, 2021, influenced by false promotions through investment briefings and press releases, reaching a market capitalization of 617.5 billion KRW.

The defendants were found to have lived lavishly, purchasing a house in Cheongdam-dong, Seoul, with criminal proceeds and driving luxury cars such as Rolls-Royce. The prosecution swiftly took pre-indictment seizure and preservation measures on their real estate, accounts, and other assets.

A prosecution official explained, "From the early stages of the investigation, we collaborated with the Financial Supervisory Service to share investigation materials, minimizing witness interviews and maintaining investigation confidentiality while completing the basic investigation," adding, "We were able to secure numerous pieces of evidence necessary to prove the charges through prompt search and seizure."

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