'Leading Chatroom Buy Recommendations After Acquiring Listed Companies' Price Manipulation Gang Indicted'

Paper Company Acquiring Listed Firms Gains 13 Billion Won in Market Price Difference

A group that acquired a KOSDAQ-listed company at a low price, then recommended buying the stock in a stock leading chat room and manipulated the market to gain huge capital gains has been brought to trial.

Source: Seoul Southern District Prosecutors' Office

On the 10th, the Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Chae Hee-man) announced that they have arrested and indicted Lee (55), the operator of a financial consulting firm and the leader of the acquisition of the listed company, Park (38), who was responsible for recruiting investors and manipulating the market, and Kim (28), the operator of the stock leading chat room, on charges including violation of the Capital Markets Act. Kim (40), another stock leading chat room operator who was less involved in the crime, was indicted without detention.

According to the prosecution, from November 2020 to February 2021, they purchased the largest shareholder stake of Company A, a KOSDAQ-listed company, at a low price, recommended the stock in the stock leading chat room, manipulated the market to raise the stock price, and then sold the shares to earn capital gains.

Lee, who served as the vice chairman of the acquisition group for Company A, along with Park, used a paper company to secure a loan using the shares of Company A to be acquired as collateral and succeeded the status of the initial stock acquirer.

Subsequently, to prevent the stock price from falling, they mobilized the stock leading chat rooms. Kim (28), who was arrested and indicted, had 100,000 YouTube subscribers and 1,000 paid chat room members. Kim (40), who was indicted without detention, had about 300 paid chat room members, and it was investigated that the members’ possible investment amount was over 25 billion KRW.

[Image source=Yonhap News]

In the chat rooms, they deceived members with statements such as "150 to 200 billion KRW will flow in through buying demand," "Funds from institutions, illegal Toto black money, and such will all come in," and "We check the volume in this room and inform the buying side, so don't worry and accumulate." The rise in Company A’s stock price enabled them to secure paid members for the chat rooms.

Park repeatedly placed small-lot purchase orders (around 1 to 10 shares) to induce stock price increases and defend against price drops. By placing small-lot purchase orders, he raised the previous price and then repeatedly placed orders at the same price to maintain that price and make it appear as if there was buying demand.

Using chat room members as 'volume receivers,' the paper companies earned about 13 billion KRW in capital gains over approximately two months. Park received about 1.35 billion KRW from persons related to the paper companies. Lee was separately detained during the crime period and did not receive profit distribution but obtained 200 million KRW of illegal gains by using undisclosed information related to the transfer of the largest shareholder’s stake.

The prosecution stated, "We swiftly investigated the fast-track case reported regarding unfair trading by Kim (40), the stock leading chat room operator, and identified Lee and others who were involved in the transfer of the largest shareholder and planned the crime comprehensively, uncovering the organized crime." They added, "All criminal proceeds obtained by them will be confiscated, and we will verify whether there was tax evasion by the corporations, associations, and investors involved as paper companies."

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