[Inside Chodong] Kim Ikrae Adjusts His Hat Under the Plum Tree

On August 9 last year, Lee Bok-hyun, Governor of the Financial Supervisory Service, quoted the proverb "Ihabujeonggwan (李下不整冠 - Do not adjust your hat under the plum tree)" during an executive meeting, urging, "We must refrain from any inappropriate behavior that could even slightly suggest a conflict of interest or suspicion in the use of job-related information." This remark was aimed at John Lee, former CEO of Meritz Asset Management, and Kang Bang-cheon, former chairman of Asset Plus.

So far this year, the main figure associated with "Ihabujeonggwan" is none other than Kim Ik-rae, former chairman of the Daou Kiwoom Group. Kim, who was embroiled in controversy for selling shares just before the stock price crash triggered by Soci?t? G?n?rale (SG) Securities, announced on the 4th a public apology along with his resignation from the chairman position and Kiwoom Securities' board directorship, as well as the full donation of 60.5 billion KRW from the proceeds of the stock sale to society. The market has grown suspicious, wondering "Why such a submissive stance unless he colluded with the manipulation forces?" Kim expressed that his resignation was due to a sense of responsibility for causing social unrest. Now, it is a matter for investigation. Whether he was an "accomplice" to the failed manipulation forces will be revealed. However, even if he receives a legal exoneration as not being an accomplice, he will not be free from suspicion.

The fact that the timing of the sale was exquisite ultimately suggests a high possibility that Kim had some prior information. Kim has completely denied any prior knowledge regarding the sale of shares just before the stock price crash, including the lower limit price, claiming it was merely a coincidence.

It seems unlikely that Kim was unaware of the "abnormal surge" in stock prices and the excessive increase in Contract for Difference (CFD) trading beforehand. Since last year, some securities firm analysts have sounded alarms about unusual signs as certain stocks, not even value stocks, continued to rise. Most of the CFD forced sell-off volumes that led to the lower limit price crash correspond to a three-tier contract structure involving "investors-Kiwoom Securities-SG Securities." As of the end of March, Kiwoom Securities' CFD trading balance was 557.6 billion KRW, ranking second in the industry. The exquisite timing of the sale and the connection between Kiwoom Securities and SG Securities inevitably fuel suspicions.

There is also suspicion that he was aware of the existence of the price manipulation forces centered around CEO Ra Deok-yeon and Hoan. If he was aware but turned a blind eye, it would be difficult to escape the accomplice frame. Even assuming he was unaware, due to his position, he might have obtained information earlier through media investigations or financial authorities' inquiries and sold shares out of concern for the impending stock price crash. He might also have known the status of CFD transactions by stock, which ordinary investors could not know. All of this could constitute the use of undisclosed material information prohibited under the Capital Markets Act.

If he used undisclosed information, he deserves criticism as a major shareholder, regardless of violations of the Capital Markets Act. Kim cited gift tax as the reason for disposing of the large stake, but the funds needed to pay the gift tax are estimated to be less than 25 billion KRW. The approximately 35 billion KRW difference implies that he sold shares for personal needs, and no matter what excuses he makes, the responsibility of a major shareholder remains. On the 28th of last month, Hwang Hyun-soon, president of Kiwoom Securities, said, "(The timing of the sale) was a coincidence and a fortunate event," pledging to stake his position on this. For the hope of the capital market, which has been stained by various unfair trades, it is hoped that he will keep his position.

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