Wealthy individuals who run general hospitals, Korean medicine clinics, and large private academies pooled 100 billion won and, over as long as 1 year and 9 months, manipulated the share prices of a very small number of stocks to pocket 40 billion won in illicit gains, authorities found. The scheme was similar to the so-called "Ra Deok-yeon case" in 2023, when eight stocks plunged over four days.
The joint task force to eradicate stock price manipulation, involving the Financial Services Commission, the Financial Supervisory Service (FSS), and Korea Exchange, said on the 23rd that it had uncovered a large-scale ring that has been systematically rigging prices from early last year until now, freezing dozens of accounts used in the manipulation and conducting raids of the suspects' homes and offices.
According to financial authorities, the wealthy individuals who run general hospitals, Korean medicine clinics, and large private academies raised 100 billion won for price manipulation by using bank loans, stock-backed loans, and even corporate funds, and passed the money to a bank branch manager, an asset management firm executive, and a former executive at a well-known private equity fund.
They picked a very small number of stocks with typically low trading volumes as their manipulation targets, and used matched and collusive orders placed tens of thousands of times to buy shares at prearranged high prices and have them executed in a short span. This created the appearance of active trading and lured in other investors.
According to authorities, during the 1 year and 9 months, they showed dogged persistence by submitting price-rigging orders virtually every single day the stock market was open. The suspects' buy orders accounted for about 30% of all trades.
With daily manipulation, the shares in question doubled. In particular, to evade financial regulators' surveillance, they spread trades across dozens of accounts, tampered with order IPs, and there were indications they exploited a management control dispute to lift the price.
The FSS first detected the case and referred it to the joint task force. Using its compulsory investigation authority, the Financial Services Commission searched the suspects' residences and offices and immediately froze their financial accounts. The financial authorities said, "We will impose a penalty surcharge of up to twice the illegal assets obtained to set an example that 'stock manipulation ruins you,' and we also plan to actively use administrative sanctions restricting trading in financial investment products and executive appointments."
Authorities said, "This case is the first for the joint task force launched to eradicate stock manipulation, and specialized personnel in unfair-trading surveillance and investigations worked closely together to swiftly carry out raids and account freezes," adding, "It is meaningful that we cut it off before the criminal proceeds and the scale of damage spread further."
This incident is similar to the stock manipulation by Ra Deok-yeon's group, whose scheme came to light when eight stocks, including DAESUNG HOLDINGS and Seoul Gas, plunged due to sell orders routed through the foreign securities firm Société Générale (SG) in 2023. Wealthy professionals acted as financiers, and to avoid the financial authorities' surveillance, they manipulated a small number of stocks over an extended period.
However, after authorities swiftly froze the accounts in question, there were reportedly no signs of a plunge in the manipulated stocks.