'Deutsche Motors Stock Manipulation' Kwon Osu Sentenced to Probation and 300 Million Won Fine in First Trial

[Asia Economy Reporter Kim Daehyun] Former Chairman Kwon Osu, who was prosecuted for manipulating the stock price of Deutsche Motors, was sentenced to a suspended prison term in the first trial.

On the morning of the 10th, the Criminal Division 23 of the Seoul Central District Court (Presiding Judge Jo Byung-gu) sentenced former Chairman Kwon, who was indicted for violating the Capital Markets Act, to 2 years in prison with a 3-year suspension and a fine of 300 million KRW.

The court stated regarding former Chairman Kwon, "As the representative of a listed company, he disregarded social responsibility and masterminded stock price manipulation of his own company’s shares, recruited key manipulators, and instructed them to manipulate the market. He also directly participated in the manipulation using accounts he operated himself," adding, "He denies all charges and shows no remorse, which increases the blameworthiness."

However, the court added, "Although the defendants had the motive and purpose of price manipulation, it is evaluated as a failed manipulation that did not achieve the co-conspirators’ pursuit of speculative gains, and it is difficult to see that serious disruption to market order occurred," and "It is not to the extent of imposing a prison sentence, but monetary sanctions are deemed necessary depending on the degree of tangible benefit obtained and the level of involvement."

Meanwhile, Lee Mo, a so-called 'stock price manipulation player' from a securities firm who was also indicted, was sentenced to 2 years in prison with a fine of 50 million KRW and was taken into custody in court. Although he was acquitted or exempted from charges related to Deutsche Motors price manipulation, he was found guilty of causing damage to a separate corporation, Arion Technology.

Kwon Oh-soo, chairman of Doich Motors, who is suspected of stock manipulation and breach of trust, is attending the pre-arrest hearing at the Seoul District Court in Seocho-gu, Seoul, on November 16, 2021. Photo by Kim Hyun-min kimhyun81@

Former Chairman Kwon was prosecuted in October 2021 on charges of conspiring with the 'stock price manipulation player,' boutique investment advisory firms, and current and former securities firm employees to raise Deutsche Motors’ stock price by mobilizing 157 accounts under 91 different names from December 2009 to December 2012. Securities firm employees and stock price manipulation players were also indicted together.

Investigations revealed that after Deutsche Motors was backdoor-listed at the end of 2008 and its stock price declined, former Chairman Kwon committed these crimes in response to investors’ demands for stock price support. Using matched trading tactics, the stock price, which was in the high 2,000 KRW range, was understood to have risen to 8,000 KRW.

At the last closing argument, the prosecution requested the court to sentence former Chairman Kwon to 8 years in prison and a fine of 15 billion KRW. They also demanded a confiscation order of approximately 8.13 billion KRW. In his final statement, former Chairman Kwon pleaded, "As a manager, I widely promoted the company’s growth potential, which became the cause of being caught up in the crime of stock price manipulation."

Amid this case, allegations arose that First Lady Kim Geon-hee played the so-called 'jeonju' role by funding the stock price manipulation, and related investigations by the prosecution are ongoing. Former Chairman Kwon denied in court that he managed Kim’s accounts or traded stocks on her behalf.

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