Rha Deok-yeon, 44, the former head of Hoan Investment Consulting and the key figure in the Societe Generale (SG) securities-led stock plunge case, was sentenced to eight years in prison on appeal on the 25th. It was reduced by 17 years from the 25-year term in the first trial.
The Criminal Division 3 of the Seoul High Court (Presiding Judge Lee Seung-han, Director General) overturned the lower court's sentence of 25 years in prison and imposed the new sentence at the appellate ruling for Rha, who was indicted on charges including violating the Financial Investment Services and Capital Markets Act. A fine of 146.51 billion won and forfeiture of 181.5832 billion won were also imposed.
Earlier, prosecutors sought 40 years in prison and a fine of 2.359 trillion won for Rha, and requested forfeiture of 12.7 billion won.
The court said, "The stock price, which had been propped up sharply for a long period through market manipulation, plunged in an instant, causing irreparable damage to many good-faith investors," but added, "Unlike typical market manipulation in which stocks are artificially boosted and then abruptly sold to reap profits, the defendant also lost all investment revenue as of Apr. 24, 2024."
It continued, "The defendant did not directly trigger the stock plunge, and it has not been confirmed what the direct cause of the plunge was or to whom the gains in this case accrued, and additional investigation is needed."
The court ruled, "Of the lower court's findings, we recognize guilt for about 11.4 billion won related to price rigging and concealment of criminal proceeds," and added, "We took into account that there has been no prior criminal punishment."
Rha's close associates, a person surnamed Byun and a person surnamed Ahn, who had been sentenced to prison in the first trial, also had their sentences reduced to three years in prison with five years of probation, and two years and six months in prison with four years of probation, respectively.
Rha and associates were brought to trial on charges of inflating the stock prices of eight listed companies by pre-setting bid and ask prices to buy and sell shares from May 2019 to Apr. 2023, then dumping large volumes to pocket about 730 billion won. It was the largest-ever detected case of stock manipulation.
They also face charges of taking about 194.4 billion won in fees by managing investments on a discretionary basis without registering with the financial authorities from Jan. 2019 to Apr. 2023, and hiding fees of the same amount in borrowed-name accounts.
The SG securities-led plunge occurred on Apr. 24, 2023, when massive sell orders poured in through the SG Securities counter, causing the stock prices of eight names, including Daou Data, to crash.