[La Deok-yeon Gate] La Deok-yeon Also Shows Loss on Account... "Difficult to Calculate Unfair Gains, Sentencing Guidelines Must Change"

Domestic Law Favors Defendant When Amount of Unjust Enrichment Is Unclear
"Stock Manipulation Should Reflect Market Disruption and Social Disorder Responsibility in Sentencing"

Legal circles point out that it will not be easy to calculate the amount of illicit gains made by Ra Deok-yeon and his group, the main culprits behind the ‘SG (Soci?t? G?n?rale) Securities Stock Price Crash Incident.’ Along with this, there are calls to include not only the scale of illicit gains but also social losses in the sentencing guidelines to ensure appropriate punishment for financial criminals.

Ra Deok-yeon, CEO of Hoan (currently in custody), who is identified as the main culprit of the stock price crash incident, faces charges of violating the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes (Criminal Proceeds Concealment Act). The Capital Markets Act stipulates that anyone who manipulates market prices shall be sentenced to imprisonment for more than one year and fined between three to five times the profits gained from the violation. The Criminal Proceeds Concealment Act prescribes imprisonment of up to five years or a fine of up to 30 million KRW for violations.

Under the Capital Markets Act, criminals who gain illicit profits of 5 billion KRW or more from unfair trading can face life imprisonment. Those with illicit gains between 500 million KRW and 5 billion KRW face imprisonment of three years or more. However, legal experts believe that in cases of stock price manipulation, it is difficult to accurately calculate illicit gains based on stock price fluctuations, making it practically challenging to impose heavy sentences. Domestic law favors the violator if the amount of illicit gains is unclear. The Capital Markets Act also includes a proviso that when it is difficult to calculate the profits gained from the violation, the maximum fine shall be set at 500 million KRW.

The prosecution estimates Ra Deok-yeon and his group’s illicit gains to be at least 264 billion KRW. However, legal experts are skeptical that this estimated amount will be fully recognized as illicit gains in court. A criminal law specialist stated, “In the SG incident, it is unclear whether the entire investment should be considered illicit gains or if it should be calculated based on the stock price at its peak. Although the estimated illicit gains are in the hundreds of billions, the amount actually recognized by the court may fall short of 5 billion KRW.” Recently, Ra claimed, “I also suffered a loss of 4 billion KRW, and I believe the real beneficiaries are the masterminds behind this,” denying responsibility for the stock price crash. This appears to be an attempt to exploit ‘legal loopholes’ and lay groundwork favorable to himself during the trial process.

Accordingly, some in the legal community argue for revising the current sentencing guidelines, which only consider illicit gains. Sang-jun Han, lead attorney at Daegun Law Firm, said, “Many precedents related to stock price manipulation state that it is difficult to accurately calculate illicit gains. In Ra’s case, the accounts even show losses. Stock price manipulation should not be viewed solely as a property crime but also punished considering market disruption and social chaos caused.”

If Ra is found to have illicit gains amounting to several hundred billion KRW or more, he is likely to receive a heavy sentence. Recently, sentences for crimes disrupting the investment market have been increasing, as seen in the Optimus incident. Kim Jae-hyun, CEO of Optimus Asset Management and the main culprit in the ‘Optimus Incident,’ was confirmed by the Supreme Court to have embezzled approximately 1.19 trillion KRW from 3,200 people under the pretense of investing in confirmed revenue bonds of public institutions, receiving a 40-year prison sentence and a confiscation order of 75.175 billion KRW. Lee Jong-pil, former vice president of Lime Asset Management and the main culprit in the ‘Lime Incident,’ was confirmed by the Supreme Court to have embezzled approximately 208 billion KRW from about 700 investors and sentenced to 20 years in prison.

Attorney Park Pil-seo of Hannuri Law Firm said, “The trend in rulings is to impose severe criminal penalties on financial and economic criminals to deter similar crimes.” Professor Lee Chang-hyun of Hankuk University of Foreign Studies Law School stated, “If Ra Deok-yeon and his group are found guilty of stock price manipulation, they are highly likely to receive substantial prison sentences.”

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