[Asia Economy Reporter Yoo Byung-don] It has been confirmed that Lee Jong-hyun, the second son of former Samsung Electronics Vice Chairman of External Cooperation Lee Ki-tae, has been indicted on charges of stock price manipulation and market manipulation.
The Financial Investigation Division 2 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Lee Bang-hyun) announced on the 18th that Lee was indicted without detention in March on charges including violation of the Capital Markets Act. B, who served as vice president of an investment company where Lee and A, the representative of a similar deposit-taking company, were registered directors, was also indicted.
Previously, after Lee received the authority to sell 'J&U Global,' a KOSDAQ-listed company acquired by former Vice Chairman Lee in 2013, he signed a contract to transfer 2 million shares and management rights to A. The prosecution found that Lee and A subsequently borrowed tens of billions of won using the company's shares as collateral.
When the risk of forced sale arose due to a decline in the company's stock price, Lee colluded with A to distribute false press releases claiming that J&U Global had entered the Chinese duty-free shop business, thereby inflating the stock price.
Although the stock price rose, the company’s losses accumulated as there were no substantial business achievements. Eventually, J&U Global failed to submit related documents during the 2016 audit by an accounting firm. During this process, B, who has an accounting background, anticipated that the company would receive a 'disclaimer of opinion' from the accounting firm and preemptively instructed Lee and A to sell their shares.
After Lee and A disposed of their shares, the audit results were disclosed, causing J&U Global’s stock price to plummet. The prosecution believes that Lee and others avoided losses amounting to approximately 7.5 billion won by using undisclosed material information.
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