Prosecutors Arrest and Indict Four Members of PHC Stock Manipulation Ring Embezzling 93 Billion Won

[Asia Economy Reporter Hwang Seoyul] Four executives of a listed company, including those who embezzled about 93 billion KRW through stock price manipulation using false information, have been arrested and indicted.

[Image source=Yonhap News]

On the 25th, the Joint Investigation Team for Financial and Securities Crimes of the Seoul Southern District Prosecutors' Office (Chief Dan Seonghan) announced that they had arrested and indicted four people, including Choi Inhwan (49), CEO of PHC, a KOSDAQ-listed medical device company, on charges of violating the Capital Markets Act.

Choi and his associates are accused of manipulating PHC's stock price by falsely promoting that they had acquired PHC without capital and were producing and exporting COVID-19 specimen transport media, which was the first in Korea to receive FDA approval. They allegedly embezzled about 80.9 billion KRW in illicit profits by diverting funds and profits meant for PHC and its affiliates. PHC's stock price rose from a closing price of 775 KRW in March 2020 to 9,140 KRW in September 2020, an increase of 1,079% in just six months.

According to the prosecution, to manipulate the stock price, they forged clinical trial results and doctor signatures related to COVID-19 diagnostic kits and specimen transport media, and submitted the fabricated documents to the Ministry of Food and Drug Safety and the FDA to obtain sales permits or register as sales companies, demonstrating bold criminal methods.

They are also accused of embezzling 13.2 billion KRW from affiliate company A, another KOSDAQ-listed company, to maintain PHC's listing. PHC and affiliate A faced delisting due to a refusal of audit opinion in March last year, resulting in a trading suspension and causing approximately 269.6 billion KRW in potential losses to minority shareholders.

There is also an accusation of destroying evidence during the investigation. According to the prosecution, Choi and his associates submitted forged emails, pretending to be correspondence with the FDA's U.S. agent, as evidence during investigations by the Financial Services Commission's Capital Market Investigation Team and the prosecution. Under Choi's direction, they deleted evidence emails during the execution of search warrants, obstructing investigations by the Financial Services Commission and the prosecution.

The prosecution stated, "We will do our utmost to maintain the prosecution against the defendants and will promptly investigate the allegations against PHC's actual shareholders, corporate raider groups, and other related parties involved in this case."

Earlier, on November 25 last year, the prosecution arrested and indicted two vice presidents of PHC. With this, the total number of defendants indicted for PHC stock price manipulation has reached six.

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