Former Edison Motors Chairman Kang Young-kwon, who was indicted on charges of hyping the stock price by promoting a plan to acquire SsangYong Motor, was sentenced to prison in the first trial. It came about three years after prosecutors indicted him.
The Seoul Southern District Court Criminal Agreement Division 13 (Presiding Judge Kim Sang-yeon) on the 3rd sentenced Kang, the former chairman indicted on charges including violating the Financial Investment Services and Capital Markets Act, to three years in prison and a fine of 500 million won.
The court found that most of the charges of violating the Financial Investment Services and Capital Markets Act were not proven. However, it found Kang guilty of some charges of spreading false information through media promotion and of unfair trading, including false disclosures, during the process of acquiring SsangYong.
The court said, "From a position of effectively controlling Edison Motors and EdisonEV (now Smart Solutions), false information about Edison Motors was spread through the media with the aim of influencing the stock price."
It also said, "Media promotion was virtually the only means by which investors considering investing in EdisonEV could obtain information."
Regarding the false disclosure, the court explained its sentencing reasons by saying it was "actively ordered and led," and that "in the end, EdisonEV was delisted and many small shareholders suffered financial damage, making the nature of the crime poor and the possibility of social condemnation high."
However, the court did not take Kang into custody in the courtroom, noting that he had been detained for a considerable period and, despite his advanced age, attended every session during the lengthy trial.
From May 2021 to March 2022, Kang is accused of gaining 162.1 billion won in market profits in about 10 months by inflating the share price of EdisonEV, a KOSDAQ-listed affiliate, through tactics such as false disclosures and press releases that deceived the market into believing SsangYong would be acquired (fraudulent unfair trading under the Financial Investment Services and Capital Markets Act).
He also faces a breach of trust charge for causing 16.4 billion won in losses to the company by inflating the stock value during a three-month period starting in Aug. 2021, when unlisted Edison Motors' paid-in new shares were acquired using EdisonEV funds.
Earlier, at the sentencing hearing, prosecutors sought 15 years in prison and a fine of about 486.3 billion won for the former chairman. They also asked the court to order the forfeiture of about 51.9 billion won.
According to prosecutors, it was found that more than 125,000 small investors suffered financial losses due to the crimes committed by the former chairman and others.