How Stock Manipulation Case Has Shaken the Local Financial Markets
Key Highlights :
The recent stock manipulation case involving Ra Deok-yeon, the head of an unregistered investment consulting firm, and his two aides has rocked the local financial markets. On Friday, prosecutors indicted the three on charges of breaching the Financial Investment Services and Capital Markets Act and the Act on Regulation and Punishment of Criminal Proceeds Concealment.
The trio is suspected of having pocketed some 730.5 billion won (US$549.9 million) in illicit profits between May 2019 and April this year through a “order matching” technique. This involves taking over mobile phones and personal information from investors and manipulating stock prices. They are also suspected of concealing part of the investment proceeds and evading taxes through his business entities, and running an investment consulting business without registering it with the government.
Ra's firm has been identified as the central player in the collapse of the stock prices of nine companies, including energy firm Samchully Co. and Seoul City Gas Co. The stocks of these companies had been steadily rising for years before they suddenly nose-dived late last month following mass sell-offs through SG Securities Korea Co., the local branch of the Societe Generale Group of France.
It is estimated that around 1,000 investors have suffered huge losses to the tune of 800 billion won to 1 trillion won. The incident has caused a stir in the local financial markets and has put the spotlight on the loopholes in the current regulatory system.
The government has been quick to respond to the incident. It has announced plans to strengthen regulations on stock manipulation and to take action against those who are found to be involved in such activities. It has also promised to ensure that investors are protected from such activities in the future.
The incident has also raised concerns about the lack of transparency in the local financial markets. It has highlighted the need for stricter regulations and better oversight to ensure the safety and security of investors.
It remains to be seen how the government and the financial authorities will respond to the incident. In the meantime, investors should exercise caution and be mindful of the potential risks involved in investing in the stock market.
