Stock manipulation involving around 5 billion won after zero-capital M&A; full-time investor admits to some charges at first trial

[Financial News] A full-time investor indicted on charges of acquiring a KOSDAQ-listed company without capital, manipulating its share price and pocketing illicit gains in the 5-billion-won range admitted to some of the allegations at the first hearing of the first trial.
Criminal Division 15 of the Seoul Southern District Court, presided over by Judge Noh Yu-gyeong, held the first hearing on the 20th for full-time investor Park, former Suseong Webtoon CEO Kim, and Kang, a former inside director of a subsidiary, who were sent to trial on charges of violating the Capital Markets Act.
Park's lawyer said, "We acknowledge that market-manipulation orders were placed," but added, "We dispute the claim that the illicit gains amounted to 5 billion won or more." The defense's position is that the calculation included even share-price gains attributable to external factors, and that it will submit a written opinion on the specific method of calculation.
Kim's side submitted a written opinion, while Kang's side did not state its position on the charges, saying it had not yet reviewed the indictment and investigative records.
According to the prosecution, the defendants were indicted on allegations that, from May 15 to July 10, 2017, they used nine nominee securities accounts to place a total of 30,221 orders designed to manipulate the market—including 6,899 high-price buy orders and 20,371 supply-depleting orders—to artificially drive up or maintain the share price and obtain illicit gains of approximately 5.7 billion won.
Investigators found that in March of the same year, Kim had acquired the largest shareholder's 19.96% stake in Suseong Webtoon for 18 billion won through a zero-capital merger and acquisition (M&A). The arrangement involved raising funds by promising investors a guarantee of their principal and 70% of the investment returns, and borrowing 14.5 billion won using shares in the target company as collateral.
The prosecution believes Kim planned the market manipulation to raise funds for investor payouts and prevent the pledged shares from being forcibly sold, and transferred at least 3 billion won to Park through Kang while commissioning Park to manipulate the share price.
Kang was found to have handled the provision of accounts and management of funds, while Park was responsible for placing orders using nominee accounts.
The share price rose about 41.5%, from a closing price of 14,200 won on May 12, 2017, to an intraday high of 20,100 won two weeks later, on the 26th of the same month.
Kim and Park were indicted while in custody on August 4, while Kang was sent to trial without being detained. The next hearing is scheduled for the 27th of next month.
[email protected] Park Seong-hyeon Reporter