"Who Is Behind the SG Incident?"... Investors Divided Over Responsibility Holder

60 Investors and 6 Others Including Ra Deok-yeon File Complaints
Investors Represented by Ra Deok-yeon Sue Company Over Stock Price Crash
Preparing to Sue Securities Firms for Opening CFD Accounts Too

A lawsuit has begun over the SG Securities-driven crash incident. General investors who suffered damages from H Investment Advisory firm have filed a complaint against CEO Ra Deok-yeon, while investors who entrusted money to CEO Ra have directed their anger at the company whose stock price plummeted.

CEO Ra Deok-yeon of H Investment Consulting Firm
Photo by Yonhap News>

On the 9th, the law firm Daegeon announced that it plans to file a complaint with the Seoul Southern District Prosecutors' Office on the same afternoon on behalf of about 60 general investors, accusing CEO Ra and six others related to H firm of fraud, breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and violations of the Act on Reporting and Using Specified Financial Transaction Information. The targets of the complaint include not only CEO Ra but also three others, including former professional golfer Ahn (33), who recruited investors, as well as H firm officials who received stock trading details and managed funds.

The investors who filed the complaint believe that CEO Ra’s side did not operate the invested funds properly. They argue that since there was an initial intent to deceive when recruiting investors, it constitutes fraud and breach of trust. Lawyer Han Sang-jun of Daegeon stated, "The stock manipulation group received investment funds for their own benefit without any intention to operate them properly from the start," adding, "As soon as they received the mobile phones, they took out leveraged loans and collected unpaid balances without the investors’ knowledge."

CEO Ra and others are also suspected of laundering and hiding investment profits. It is reported that they laundered money by transferring some of the profits under the name of commissions to golf academies, galleries, gyms, restaurants, and online media without actually purchasing goods. The deposited money was reportedly managed by CEO Ra’s side through corporate accounts and others. Most of the accused by law firm Daegeon are registered as inside directors and auditors of these companies.

"Ra Deok-yeon, Intent to Deceive from the Start" vs "Responsibility Lies with Daou Kiwoom Group and Seoul City Gas"

On the other hand, investors who entrusted money to CEO Ra claim that the responsibility for the stock price crash lies with the respective companies. According to the legal community, about 50 investors on CEO Ra’s side submitted petitions to three institutions?the Seoul Southern District Prosecutors' Office, the Financial Services Commission, and the Financial Supervisory Service?alleging that former Daou Kiwoom Group Chairman Kim Ik-rae and Seoul City Gas Chairman Kim Young-min violated the Capital Markets Act by selling stocks just before the stock price crash. The petitions reportedly include transaction details at the time of the crash and materials related to suspicions about former Chairman Kim Ik-rae and others.

Former Chairman Kim Ik-rae sold 1.4 million shares of Daou Data, the holding company of Daou Kiwoom Group, through an off-hours block deal two trading days before the stock price crash on the 20th of last month. The value of the stocks he sold was 60.543 billion KRW. Chairman Kim Young-min also sold 100,000 shares of Seoul Gas stock worth 45.7 billion KRW on the 17th of last month. CEO Ra claims, based on this, "I am also a victim."

A lawsuit against securities firms is also beginning. The day before, the law firm One & Partners announced a group lawsuit recruitment and warned of lawsuits against Kiwoom Securities, Yuanta Securities, Hana Securities, and Korea Investment & Securities. These securities firms are reported to have opened securities accounts that allow margin trading with only mobile phone verification opened by former CEO Ra’s side, without identity verification or consent. Investors argue that high-risk transactions such as leveraged trades and Contracts for Difference (CFD) accounts were created without their knowledge, and that these firms failed to function as intermediary financial institutions.

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