A group that acquired a KOSDAQ-listed company with no capital and then used price rigging to drive up the share price, taking about 5.7 billion won in unfair gains, has been sent to trial.
On the 4th, the Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office (Director General Kim Min-gu) and the Investigation Division (Director Yun Jae-nam) indicted three people, including former CEO A of a KOSDAQ-listed company and price-rigging expert B, on charges of violating the Financial Investment Services and Capital Markets Act.
A lured investors with a promise of principal protection and a 70% split of investment revenue, and in March 2017 acquired 19.96% equity (1,636,364 shares) of the company's largest shareholder for 18 billion won by borrowing 14.5 billion won using the company's shares targeted for acquisition as collateral.
The company manufactures and sells cargo handling machinery and the like, and it was listed on KOSDAQ in 2005.
Afterward, A planned price rigging to secure funds to pay investors revenue and to prevent forced liquidation of the collateralized shares. Through inside director C, A provided 3 billion won to price-rigging expert B and asked B to carry out the scheme, according to findings.
B submitted more than 30,000 price-rigging orders using nine borrowed-name accounts. As a result, within two weeks the share price was lifted about 41.5%, and the defendants took unfair gains worth 5.7 billion won.
Meanwhile, A was found to be involved in another no-capital mergers and acquisitions (M&A) case. B, who had previously served a prison term for a similar crime and was released, was found to have joined the scheme afterward.
Arrest warrants were issued for A and B on the 21st of last month, and they are currently in custody. C is expected to stand trial without detention.