Police Detain Investment Firm Official Who Recommended 'Lower Limit Stocks'

The police, investigating an incident in which an unregistered investment firm recommended stocks that hit the lower limit in the stock market, have taken a key figure from the investment advisory firm into custody and launched a full-scale investigation.

On the 25th, the office of investment advisory firm A located in Samseong-dong, Gangnam-gu, Seoul was already dark and empty. There were no signs or notices indicating it was an investment advisory firm around the office.
Photo by Gong Byung-sun mydillon@

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On the 26th, the Gangnam Police Station in Seoul announced that they had booked Mr. B, a representative of investment advisory firm A, on suspicion of violating the Capital Markets Act and are currently investigating.

According to the police, investment advisory firm A is suspected of violating the Capital Markets Act by providing investment advice without registering with the Financial Services Commission.

The police responded to a 112 emergency call around 7 a.m. the previous day reporting a dispute and arrived at the scene, where they reportedly seized about 200 mobile phones. It is known that the police have applied to the prosecution for a post-seizure search warrant to analyze the seized items.

Related companies such as Daol Investment & Securities, Samchully, Seoul Gas, and Harim Holdings saw their stock prices plunge by the maximum limit of 30% on the 24th, closing the market sharply down.

A police official said, "We are currently examining the connection to the crime" and added, "We will investigate the exact circumstances of the incident."

Meanwhile, the office of investment advisory firm A, located in Yeoksam-dong, Gangnam-gu, Seoul, is currently empty. There were no employees working on site, and only five pairs of slippers were left on the floor.

Mr. Shim Sang-jun (48, male), who runs a business in the same building, said, "It is a quiet neighborhood, so even five people gathering draws attention, but around 1 to 2 a.m. that day, about 20 people gathered near the building," adding, "The age range was diverse, from people in their 30s to 50s."

People in the same building testified that they had no idea that an investment advisory firm was operating in that office. The company name on the signboard resembled that of a temple, so people did not suspect anything. However, they found it strange that someone drove expensive foreign cars. Mr. Kim Hyung-chul (48, male), who also runs a business in the same building, said, "A person with a shaved head drove an expensive foreign car, so we thought he was a wealthy monk," adding, "We often heard the sound of a wooden fish (moktak) in the building."

Hwang Se-woon, a research fellow at the Korea Capital Market Institute, said, "Investors should first check whether the company providing investment information is registered with the Financial Services Commission," adding, "Unregistered firms imply a risk of not properly complying with the regulations stipulated in the Capital Markets Act." He further emphasized, "Ultimately, it is important to verify whether the advisory firm is registered before receiving investment advice to assess the reliability of the information provided."

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