‘Super Investor’ Indicted While in Custody for Manipulating Stock Prices With Wine-Group Acquaintances’ Money, Pocketing 6.2 Billion Won

[Financial News] A full-time investor accused of manipulating a stock price for more than three years by using loans along with investment money from acquaintances met at wine gatherings, and of pocketing tens of billions of won in illicit gains, has been indicted while in custody.
The Seoul Southern District Prosecutors' Office said on the 18th that it indicted full-time investor A, 35, while in custody on the 17th on charges of violating the Capital Markets Act. Co-conspirator and full-time investor B, 36, was summarily indicted on charges of aiding and abetting violations of the Capital Markets Act.
According to prosecutors, A allegedly placed 15,908 market-manipulation orders, including high-price buy orders, fictitious trades and matched trades, for shares of KOSDAQ-listed Company C from January 2020 through May 2023, obtaining about 6.2 billion won in illicit gains. During that period, Company C's share price increased nearly fourfold, from 11,800 won to 45,800 won.
Company C is known to design, manufacture and install powder-conveying systems, including pipes for transporting coal dust. Based on years of experience as a full-time investor, A allegedly targeted Company C because its small number of shares in circulation made it easier to manipulate the stock price.
A allegedly solicited funds from 26 people, including businesspeople and doctors he met at high-end wine and gourmet gatherings, promising to share investment returns. They provided 47 securities accounts, six contracts-for-difference (CFD) accounts and investment funds. A was also found to have borrowed about 12 billion won from cryptocurrency dealers and private moneylenders.
Prosecutors said the total amount deposited into the accounts during the period was 74.5 billion won. With leverage from credit-financed purchases, stock-backed loans and CFD trading, cumulative stock purchases reached 340 billion won. As a result, the amount of shares secured by A increased from 8% to more than 40% of the shares available for trading in the market.
B was accused of submitting a total of 66 market-manipulation orders from June 2022 through May 2023 after friend A, who was facing a crisis of cascading forced liquidations due to excessive leverage, asked B to place high-price buy orders and conduct matched trades.
A was also charged with operating an unregistered discretionary investment management business and violating reporting obligations for shareholdings. From early 2019 through last month, A allegedly managed investors' securities accounts without registering the business and received 1.65151 billion won in fees. From May 2022 through May 2023, A allegedly violated the reporting obligation three times despite holding at least 5% of Company C's shares or experiencing changes of at least 1 percentage point in the holdings.
Prosecutors added that A used criminal proceeds to cover expenses for his cohabiting partner's luxury spa business and provide living expenses. A was also found to have lived in a luxury villa and spent 20 million to 30 million won a month on credit card bills.
Meanwhile, as Company C's deteriorating earnings and other factors sent its share price lower, securities firms carried out cascading forced liquidations of A's holdings in May 2023. The price plunged from 45,800 won to 22,050 won in four days, and stood at 6,790 won as of the 16th.
A was found to have attempted to destroy evidence by deleting Telegram chats with accomplices and asking those entrusted with funds and accounts to give false statements in preparation for the investigation. During search-and-seizure operations, prosecutors secured audio recordings of phone calls between A and B and additionally uncovered evidence supporting B's aiding-and-abetting charge.
After receiving a complaint from the Financial Supervisory Service in October 2024, prosecutors searched their residences and other locations from March through this month and arrested A on the 2nd.
Prosecutors said they view the case as stock-price manipulation disguised as long-term investment in blue-chip stocks, promoted through the image of a successful 'super investor.' They vowed to take firm action against financial and securities crimes in cooperation with the Financial Supervisory Service and Korea Exchange (KRX).
[email protected] Park Seong-hyun Reporter