Kim Ik-rae, who sold Daou Data just before the plunge, absent from FSC summons

Emergency Meeting of Securities Company CEOs Led by Deputy Director Ham Yong-il
Financial Authorities: "Investigation of Chairman Kim Unavoidable"... Daou Kiwoom: "Allegations of Manipulation Are Nonsense"

On the morning of the 28th at 10 a.m., the Financial Supervisory Service (FSS) urgently convened the heads of securities firms, but Kim Ik-rae, chairman of the DaouKiwoom Group, who is suspected of being involved in the recent stock price manipulation scandal, ultimately did not attend.

Starting at 10 a.m., the FSS held an emergency communication meeting with the CEOs of securities firms. Presided over by Ham Yong-il, Deputy Governor of the FSS, the meeting was attended by the Deputy Governor for the Financial Investment Division, the Director of the Capital Market Supervision Bureau, the Director of the Financial Investment Inspection Bureau, as well as Seo Yoo-seok, Chairman of the Korea Financial Investment Association, and CEOs from 35 domestic securities firms. Deputy Governor Ham requested, "Please ensure thorough risk management regarding credit extensions to individual investors and contracts for difference (CFD) trading."

What drew attention was whether Kim Ik-rae, chairman of DaouKiwoom Group, would attend. A securities firm official said, "Since this was a communication meeting presided over by Deputy Governor Ham Yong-il, not FSS Governor Lee Bok-hyun, it is unusual compared to other securities firms where vice presidents typically attend on behalf of their CEOs," adding, "This is practically a disgrace to the securities industry." However, Chairman Kim ultimately did not attend, and only Hwang Hyun-soon, president of Kiwoom Securities, was present.

Amid a stock market crash involving the sale of shares through the Soci?t? G?n?rale (SG) Securities window affecting eight stocks, suspicions have arisen as Kim sold his DaouData shares just before the crash. The financial authorities have already launched an investigation into Chairman Kim. According to the FSS electronic disclosure system, on the 20th, Kim sold 1.4 million shares of DaouData through off-hours trading at 43,245 KRW per share, securing approximately 60.5 billion KRW. His DaouData stake decreased from 26.66% to 23.01%, a drop of 3.65 percentage points. However, two trading days after Kim sold his shares, on the 24th, the SG Securities-triggered crash began, and DaouData shares hit the lower limit price for two consecutive days, falling 19% and 4% on the 26th and 27th respectively. On the 27th, DaouData’s stock price was 16,490 KRW, a 62% plunge from the price at which Kim sold.

DaouData’s stock price steadily rose from around 10,000 KRW in July last year to the 30,000 KRW range earlier this year, and reached the 50,000 KRW level in February. Chairman Kim made a large sale after the stock price soared in just half a year, and the subsequent massive crash has led to suspicions in the securities industry that he may be connected to stock manipulation groups.

However, the DaouKiwoom Group stated that "Chairman Kim’s share sale is completely unrelated to the current incident." They explained that gift tax was incurred when Kim gifted shares to his children in 2021, and some shares were sold to pay the taxes. The sale just happened to occur shortly before the SG Securities-triggered crash.

A securities industry insider said, "Despite DaouKiwoom Group’s explanation, the timing of Chairman Kim’s share sale?just two days before the crash?is suspicious," adding, "There are rumors in the market that the manipulation group knew in advance about Kim’s sale timing, so an investigation by the financial authorities is inevitable."

The DaouKiwoom Group, founded by Chairman Kim, controls 100 affiliates including seven listed companies such as DaouData and Kiwoom Securities, and 93 unlisted companies. Chairman Kim has been conducting succession work recently, including gifting 2 million DaouData shares to his children in 2021.

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