Naturecell Chairman Ra Jung-chan, First Appeal Trial This Month After Two Postponements

The Issue of Illegality and Intentionality in the Stock Price Boosting Process of Naturecell

[Image source=Yonhap News]

[Asia Economy reporters Seongpil Cho and Byungdon Yoo] The first hearing of the second trial for Ra Jeongchan, chairman of Naturecell, a KOSDAQ biotech company accused of manipulating its stock price, will be held on the 21st. The Seoul High Court Criminal Division 7 (Chief Judge Seong Suje) plans to hold the first appellate hearing of this case on that day. Thus, Chairman Ra will face the second trial two years after being indicted on charges including violation of the Capital Markets Act.

This case was filed at the Seoul Southern District Court in August 2018. The presiding court, Seoul Southern District Court Criminal Division 13 (Chief Judge Shin Hyukjae), held 17 hearings over about a year starting from January last year after a preparatory hearing. Then, in the sentencing hearing in February this year, Chairman Ra was acquitted. The case was transferred to the Seoul High Court following the prosecution's appeal. Although the first hearing was originally scheduled for May, the second trial court postponed the schedule through a 'Change of Hearing Date Order.' It was postponed once again in July, and the first hearing date was set for this day after the summer recess.

The key issue in this case is whether there was illegality or intent in the process of boosting Naturecell's stock price. Chairman Ra was indicted on charges of manipulating the stock price to gain an unfair profit worth approximately 23.5 billion KRW during the process of applying for conditional approval of the stem cell therapy candidate drug 'Jointstem' with the Ministry of Food and Drug Safety. Whether Chairman Ra exaggerated the new drug's effects by distributing press releases to media outlets and holding clinical trial result presentations as if he had succeeded in developing a new stem cell therapy drug whose clinical efficacy was not proven is the factor that will determine guilt or innocence.

Previously, the first trial court acquitted him, ruling that the prosecution's charges lacked proof of crime. At that time, the court stated, "The prosecutor argued that Naturecell applied for conditional approval to boost the stock price despite knowing it would be rejected, but the submitted evidence is insufficient to recognize this," and added, "If there is reasonable evidence, a company promoting its performance through media reports does not constitute rumor spreading."

The first trial court also pointed out the prosecution's inadequate investigation during the trial. It did not recognize the evidentiary value of a significant amount of evidence collected illegally through separate warrantless searches. The court said, "Excluding the illegally collected evidence, it is difficult to conclude beyond reasonable doubt that the defendant's charges are proven with the remaining evidence related to the indictment."

In the previous first trial closing argument, the prosecution requested a 12-year prison sentence for Chairman Ra, stating, "This crime is very serious." However, failing to have the evidence recognized ultimately damaged their credibility. A lawyer in Seocho-dong said, "If acquitted due to insufficient evidence, it can be supplemented and overturned in the appellate trial," but added, "The outcome will depend on how the illegal evidence is supplemented."