Stocks Hit by 'Stock Price Manipulation' Allegations: Where Are They Now?... Some Facing Delisting Threats

Stock Price Plunge in 8 Stocks Triggered by SG Securities, 80-90% Drop Even After 6 Months
5 Stocks Hit Lower Limits by Bareun Investment Research Institute, Decline Rate Stagnates at 70-80%
Seolbeom, Chairman of Daehan Textile, Raises Stake Through On-Exchange Purchases Amid Plunge
Manho Steel, with Auditor's Opinion Rejected, Undergoing Delisting Procedures

KOSPI-listed companies Yeongpung Paper and Daeyang Metal simultaneously hit sudden lower price limits on the 18th, prompting financial authorities to launch an investigation. This marks the third 'lower price limit incident' this year alone. Similar to the stocks involved in the April crash of eight stocks triggered by Soci?t? G?n?rale (SG) Securities and the June lower price limit incident involving five stocks linked to the online stock investment cafe 'Bareun Investment Research Institute,' strong suspicions of stock price manipulation by specific forces have been raised this time as well. A financial investment industry insider said, "Given the sensitivity of authorities to price manipulation suspicions following the April and June lower price limit incidents, it seems that these forces took bold actions."

The bigger problem is that it takes a long time to concretely prove the allegations against the stock price manipulation forces, meaning individual investors who invested in the related stocks inevitably suffer losses. In fact, the stock prices of the stocks that hit the lower price limits in the previous two incidents have mostly not recovered even after 4 to 6 months. Moreover, while individual investors continue to suffer significant losses, some major shareholders of certain stocks took advantage of the price crashes to strengthen their control. Additionally, some stocks have been pushed to the brink of delisting.

According to the Korea Exchange on the 20th, the stock prices of 13 stocks that hit multiple lower price limits on April 24 and June 14 have mostly not recovered even after several months. Daesung Holdings recorded a price change rate of -90% compared to the day of the first lower price limit (based on the previous day's closing price). Seongwang (-89.47%), Seoul Gas (-86.47%), and Samchully (-80.16%) also failed to escape the sharp decline. These stocks were targets of the so-called 'Ra Deok-yeon Gate' incident, and although nearly six months have passed since the first lower price limit incident, their stock prices remain at only 10-20% of pre-incident levels.

The situation is not much different for the five stocks that hit multiple lower price limits in June. Daehan Textile recorded a price change rate of -83.07% compared to before the incident, followed by Dongil Industry (-76.67%) and Banglim (-72.78%). At the time of the second lower price limit incident, financial authorities suspended trading of these five stocks for about two weeks to protect investors, but the stock prices plunged again immediately after trading resumed.

Yeongpung Paper and Daeyang Metal, which most recently recorded sudden lower price limits, are currently under trading suspension. However, based on previous cases, such measures are insufficient to prevent further price declines, leaving investors in these stocks anxious.

Taking advantage of the stock price crashes caused by being targets of price manipulation, some major shareholders of listed companies have additionally purchased shares. Seol Beom, chairman (CEO) of Daehan Textile, bought shares through on-market purchases and other methods since July after the lower price limit incident. As a result, Seol's stake in Daehan Textile increased from 25.89% (as of July 11) to 30.46% (as of October 6). Some of these shares were inherited from his mother, Im Hee-sook. This quick inheritance and share purchase amid the stock price crash strengthened his control.

Oh Gil-bong, CEO and major shareholder of Dongil Metal, also announced that his stake increased from 58.66% to 58.73% on September 21, after the lower price limit incident. Additionally, Oh's children, Oh Jung-kwon and Oh Seong-hwan, each purchased 3,000 shares on August 25, increasing their stakes.

In the case of Daol Investment & Securities, whose stock price decline was relatively less severe, the stock price plunged after the lower price limit incident, leading Kim Ki-su, CEO of Presto Investment Advisory, to purchase a large number of shares, raising the possibility of a management dispute. Kim holds 7.07% of Daol Investment & Securities shares, making him the second-largest shareholder. Including shares held by related parties, the total reaches 14.34%.

Among the stocks involved in the lower price limit incidents, some are facing delisting threats. Manho Steel is undergoing delisting procedures after receiving a refusal opinion in its audit report for the last fiscal year. Trading has been suspended since the 25th of last month. However, the company announced that it submitted an objection to the delisting on the previous day.

Following the two mass lower price limit incidents, on the 25th of last month, the Korea Exchange Market Surveillance Committee announced a 'Comprehensive Improvement Plan to Enhance the Capital Market Unfair Trading Surveillance System.' Since the stock price manipulation attempts of the problematic stocks spanned several years, but the current abnormal transaction detection standard covers only 100 days, there was no way to filter them out in advance. Accordingly, authorities announced plans to establish 6-month and annual abnormal transaction detection standards. They also plan to improve the market warning system by introducing criteria to designate investment warnings for stocks whose prices have surged more than 200% compared to a year ago.

However, since revising related regulations and developing systems take time, actual implementation is expected in the first half of next year. A Korea Exchange official said, "The market warning system requires amendments to detailed rules, so related procedures are necessary. We plan to collect opinions from all market participants, including individual investors, early next month, then proceed with system upgrades aiming for implementation early next year."

Authorities reportedly view the recent lower price limit incident involving Yeongpung Paper and Daeyang Metal as using similar methods to the previous two cases. In particular, there were already many warnings in the securities industry about Yeongpung Paper's excessively rapid price surge. Nevertheless, delayed action by authorities allowed a similar incident to occur again, causing additional victims, making it difficult to avoid criticism.

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