"SG Incident" La Deok-yeon Side "Denies Market Manipulation Charges... Admits Unregistered Investment Discretion"

"Stock Purchase Orders Are Correct but Not Market Manipulation"
Co-defendants Byeon Mo and Ahn Mo Make the Same Claim
Joint Trial Scheduled with Accomplices Including Safe Keeper

In the 'SG Securities Stock Price Crash Incident,' Ra Deok-yeon, CEO of Hoan (42), who was identified as the main culprit of stock price manipulation, and one other person denied the allegations of market manipulation. They only admitted to charges related to unregistered investment discretionary business.

At the first trial held at 10:30 a.m. on the 29th at the Seoul Southern District Court Criminal Division 11 (Presiding Judge Jeong Do-seong), Ra, who is charged with violating the Capital Markets Act (market manipulation, unregistered investment discretionary business) and the Act on the Aggravated Punishment of Specific Economic Crimes (concealment of criminal proceeds), denied the market manipulation charges. Regarding the concealment of criminal proceeds, he only admitted to the proceeds related to the unregistered investment discretionary business charge.

[Image source=Yonhap News]

According to the prosecution, Ra and others are accused of manipulating the stock prices of eight listed companies, including Samchully and Dowoo Data, through prearranged trading from May 2019 to last April, using several hundred billion won raised from investors through profit agreements and other means. Prearranged trading refers to transactions where buyers and sellers agree in advance on the stock, quantity, and price. The prosecution believes they gained approximately 730.5 billion won in illicit profits through this process.

They are also charged with attracting investment discretionary clients without financial investment business registration from January 2019 to last April, managing CFD accounts on behalf of clients, and obtaining illicit profits worth about 194.4 billion won. From April 2020 to last April, they are accused of laundering and concealing criminal proceeds by using fees received from investors to make payments at golf courses, restaurants, hospitals, etc., where the stock manipulation group had registered as CEOs or inside directors, or by receiving payments through nominee accounts and disguising these as sales income.

Ra’s side denied the charges, stating that although there were stock purchase instructions, it was not market manipulation. They argued, "Looking at the stock trading patterns, most orders were buy orders, and although there were some high-priced purchases, there were also many orders placed below the asking price. This seems no different from the trading patterns of securities firms that form funds to invest in stock trading, buying cheaply and selling at high points to make profits." They added, "Starting with Daesung Holdings in 2019 and sequentially through Daol Investment & Securities in 2023, we sought investment companies for value investing."

They also cited the low bid involvement rate as evidence. The bid involvement rate refers to the proportion of buy orders and executed quantities by market manipulation forces relative to the total order quantity. Ra’s side said, "According to the analysis report submitted by the prosecution, this figure is not high," and added, "We will commission experts to separately analyze the trading patterns in the future." They argued that the illicit profits obtained by Ra and others should be adjusted to reflect external factors, and that it should be reviewed whether unrealized gains can be calculated excluding external circumstances.

However, they admitted all charges related to unregistered investment discretionary business. While denying market manipulation charges, they only admitted to the criminal proceeds part of the concealment of criminal proceeds charge related to unregistered investment discretionary business.

[Image source=Yonhap News]

Ra’s closest aide, Byeon Mo (40), and professional golfer Ahn Mo (33), who were also indicted on the same charges, shared the same claims as Ra’s side. Additionally, Ahn’s side stated, "The indictment states that Ahn was involved around May 2021, and overall, it can be seen that knowledge of the entire criminal method was obtained afterward, but Ahn is also indicted for the entire crime that started in 2019," and added, "We dispute all charges but believe the period should be specified."

Also present at the trial were Park Mo (37), who oversaw stock trading, Jang Mo (36), who managed finance and criminal proceeds, and Jo Mo (41), who was in charge of investment attraction and client management, all facing the same charges. Their lawyers stated they had not yet secured evidence records and would present their opinions on the charges at the next hearing. The court plans to consolidate the trials of Ra and the other three defendants for joint proceedings.

The court urged the defendants to clearly determine whether the circumstances reported in the media so far are being claimed as not constituting market manipulation, as this trial concerns the dispute over market manipulation charges. In response, Ra’s side argued, "It is important to objectively determine whether buy and sell orders constitute market manipulation regardless of where the investors placed orders on their phones."

They continued, "The leverage used through CFD accounts is also a key issue in whether the buy and sell volumes through these accounts constituted market manipulation," and added, "CFD accounts were used because investors do not trade stocks under their own names, so they do not bear capital gains tax or acquisition tax, and were used solely to guarantee anonymity."

The next hearing for Ra and his group is scheduled for 10:30 a.m. on the 13th of next month.

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