[La Deok-yeon Gate] From Civil Cases to Rehabilitation... Investors Receiving Debt Collection Notices 'Anxious'

Debt Collection Pressure Intensifies but Solutions Remain Elusive
Brokerages and Financial Authorities Take Firm Stance, Large-Scale Litigation Expected

Due to the 'SG Securities-triggered crash,' investors who received debt collection notices are now in a critical situation. They are seeking various solutions ranging from civil lawsuits to rehabilitation, but circumstances are unfavorable. Some investors have petitioned financial authorities to postpone debt collection, but the stance of securities firms and financial authorities remains firm, deepening investors' worries. The legal community predicts that, with no practical relief measures available, the situation will ultimately escalate into large-scale litigation.

Ra Deok-yeon, CEO of Hoan, is attending the pre-arrest detention hearing at the Seoul Southern District Court on the morning of the 11th. Photo by Yonhap News

According to the legal sector on the 15th, law firms have recently seen an increase in consultations from investors affected by this incident seeking damage recovery. Law firm One & Partners reported that more than twenty people sought consultations shortly after announcing preparations for civil lawsuits against securities firms. Other law firms, such as Gwangya, are also preparing civil lawsuits against the stock manipulation group led by Ra Deok-yeon, while law firm LKB holds weekly seminars explaining rehabilitation methods.

This is because securities firms are pressuring investors by proceeding with debt collection on unpaid and overdue amounts. The stock manipulation group led by Ra Deok-yeon traded stocks through mobile phones registered under investors' names and opened Contracts for Difference (CFD) accounts without investors' consent. Due to the stock price crash, the margin ratios in investors' accounts turned negative. For example, on the 25th, Kiwoom Securities announced that, due to increased unsettled risk, it would collect 100% of the entrusted margin for eight stocks, including Seongwang, Harim Holdings, and Sebang, whose prices plummeted in this incident.

Investors are desperately searching for relief methods. Mr. A, who invested using a credit loan, is being pressured by securities firms for debt collection. He said, "I haven't even told my family about this, so the pressure is even greater." Other investors are in similar situations. A representative from a law firm stated that most clients' losses exceed 1 billion KRW due to leverage. Among the investors who sued Mr. Ra, there are cases of losses amounting to 10 billion KRW, including principal. Some investors have even faced provisional seizures.

Some investors have requested financial authorities to suspend debt collection and delay interest charges. On the 4th, law firm Daegeon submitted a petition to the Financial Services Commission. Attorney Gong Hyeong-jin of law firm Daegeon said, "It is not appropriate for securities firms, which have gained enormous profits from this incident and whose responsibility is unclear, to proceed with collection immediately," adding, "I hope financial authorities pay attention to this matter."

However, the Financial Services Commission and the securities industry maintain a firm stance. A Financial Services Commission official told Asia Economy, "Since this is an issue between individual securities firms and investors, it is not fundamentally a matter for government intervention." An anonymous securities industry official said, "It is questionable whether securities firms should be held responsible for problems arising from opening mobile phones and accounts using the investors' information."

Legal experts also view the possibility of financial authorities providing relief to investors as low. Seo Ji-won, lead attorney at law firm Naran, said regarding investors' proposals for debt collection postponement and suspension of delay interest by financial authorities, "It is uncertain whether these can be established," adding, "Since the use of mobile phones entrusted to Ra Deok-yeon's group is likely to be judged illegal, finding relief measures will not be easy."

※ This SG Securities-triggered stock price crash has sounded an alarm for the capital market order. Readers' reports will greatly aid in uncovering the truth. We welcome any reports regarding investment damage cases, stock manipulation and asset concealment by Ra Deok-yeon's group, insider details about the mass sales by major shareholders of Dow Data and Seoul Gas, or any other related information (jebo1@asiae.co.kr). Asia Economy will do its utmost to establish a transparent capital market order.

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