[La Deok-yeon Gate] Core of Prosecutors' Investigation is 'Collusive Trading'... Possibility of Additional Charges for Unauthorized Fundraising

Key to Proving Market Manipulation... Investigation Team Analyzes Stock Transactions
Possibility of Additional Charges Such as Unauthorized Fundraising and Tax Evasion

The key issue in the prosecution's investigation into the ‘SG Securities-triggered stock price crash incident’ is how to prove market manipulation through collusive trading. Legal circles predict that, in addition to the current charges of violating the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes (concealment of criminal proceeds), further investigations may lead to charges of violating the Act on the Regulation of Similar Credit Transactions and tax evasion.

A prosecution official stated, "It is important to determine whether the stock price fluctuations were due to natural market conditions." Although no specific details were provided, this implies that the core of the investigation is to ascertain whether the stock price manipulators artificially influenced the stock prices.

To prove market manipulation, it must be revealed that CEO Ra Deok-yeon and others at Hoan used ‘collusive trading’ tactics to inflate stock prices. Collusive trading refers to illegal transactions where buyers and sellers prearrange stock trades. A legal expert said, "Regardless of the number of times, collusive trading is proven illegal once it is confirmed that there was an intent to manipulate stock prices."

Yang Tae-jung, lead attorney at the law firm Gwangya, explained, "The key to proving collusive trading charges is to verify whether the participants had prior agreements." He added, "In this case, since investors handed over their ID cards or digital certificates to the stock manipulators, it can be seen as a form of self-collusive trading." He further stated, "If this is confirmed, it will be difficult for the stock manipulators to avoid collusive trading charges."

[Image source=Yonhap News]

The joint investigation team from the Seoul Southern District Prosecutors’ Office, the Financial Services Commission, and the Financial Supervisory Service received over 200 mobile phones seized by the police from Hoan’s office on the 11th and is currently analyzing evidence of collusive trading. They have also secured account transaction records and communication data related to CEO Ra.

Meanwhile, there is also a possibility that the joint investigation team will apply charges of violating the Act on the Regulation of Similar Credit Transactions against the stock manipulators. On the 10th, the prosecution applied charges of violating the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes against CEO Ra, who was arrested. A legal expert said, "If during the investor recruitment process, promises were made to guarantee the principal and the amount raised was large, it could constitute a violation of the Act on the Regulation of Similar Credit Transactions." According to this law, it is illegal for unregistered companies to raise funds by promising to pay the full principal or more to unspecified many people.

There may also be additional charges of tax evasion related to their failure to pay taxes on business income earned through investments. CEO Ra is suspected of evading taxes by diverting investment fees through payments made at a golf practice range, beauty salons, equestrian centers, fitness centers, and hospitals operated by his close associates. There are also allegations that after acquiring an internet media company, he collected investment fees through banner advertisements and other means.

[Image source=Yonhap News]

The joint investigation team is expanding the probe to include accomplices. So far, the investigation has focused on insiders such as the unregistered investment advisory firm Hoan operated by CEO Ra, but even those who were originally Hoan’s clients could become subjects of the investigation if they later participated in recruiting investors.

The prosecution arrested and investigated three stock manipulators: CEO Ra, his close aide Byun Mo, and professional golfer Ahn Mo, and has filed detention warrants against them. The pretrial detention hearing for CEO Ra began this morning, while the hearings for the other two are scheduled for 10:30 a.m. on the 12th. Im Mo, CEO of beauty company S, where Ra serves as an inside director, has also been registered as a suspect by the prosecution.

※ The SG Securities-triggered stock price crash incident has sounded an alarm for the order of the capital market. Readers’ tips will be a great help in uncovering the truth. We welcome any reports regarding investment damage cases, suspicions of stock manipulation and asset concealment by Ra Deok-yeon’s group, insider details on the mass sell-off by major shareholders of Dow Data and Seoul Gas, or any other related information (jebo1@asiae.co.kr). Asia Economy is committed to establishing a transparent capital market order.

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