Chokwang Leather sues 'Stock Farmer' Park Young-ok for return of 500 million won—why?

[Financial News]  Chokwang Leather has drawn attention after filing a lawsuit seeking the return of 500 million won in short-swing profits from individual investor Park Young-ok, known as the “Stock Farmer.” The company claims Park made short-swing profits while trading Chokwang Leather shares through accounts in the names of affiliated companies and family members.
According to Chokwang Leather on the 28th, the company filed a complaint with the court on the 13th seeking the return of short-swing profits from Park. Chokwang Leather suspects that Park traded its shares through accounts associated with Smart Income, a private company he controls; EMC Edutainment, where he serves as an inside director; and accounts in the names of his siblings. Park currently holds a 12.67% stake in Chokwang Leather, making him its second-largest shareholder.
The lawsuit is related to allegations of price manipulation and unfair trading by Park previously flagged by financial authorities. The SFC cited allegations including that Park used his own and nominee accounts to submit a total of 727 orders with characteristics of price manipulation between May 2023 and January 2024. Allegations of unfair trading through matched orders were also raised.
The SFC referred the allegations of price manipulation and unfair trading to investigative authorities, and filed a complaint over the alleged breach of large-shareholding reporting requirements.
However, because the SFC’s resolution did not disclose the specific account holders behind the nominee accounts, Chokwang Leather identified the accounts it suspects based on the shareholder register and other relevant materials. The actual parties who traded through accounts in the names of affiliated companies and family members, and who ultimately received the funds, are expected to be key issues in the lawsuit.
Under Article 172 of the Capital Markets Act, if a major shareholder of a listed company makes a profit by buying and selling shares in that company within six months, the company may seek the return of that profit. Chokwang Leather has made a preliminary estimate that trades under Smart Income’s name generated approximately 509.66 million won in short-swing profits.
Chokwang Leather will initially seek the return of 500 million won and plans to obtain financial transaction information and other materials during the lawsuit to verify the trading records and flow of funds involving accounts in the names of affiliated companies and family members. It intends to increase the amount claimed depending on what further examination of the trading records reveals.
Meanwhile, in the financial investment industry, the actual parties who traded through accounts in the names of affiliated companies and family members, as well as the basis for calculating the short-swing profits, are seen as likely to be key issues in the lawsuit. The amount claimed could change depending on the results of future reviews of the relevant trading records.
[email protected] Kim Kyung-a Reporter