Court: "Stock Market Fairness Undermined... No Recovery for Damages"
[Asia Economy Reporter Yoo Byung-don] A first-instance court sentenced the former CEO of a KOSDAQ-listed company to five years in prison for allegedly acquiring a listed company through a no-capital merger and acquisition (M&A) and manipulating stock prices with false press releases to gain hundreds of billions of won in illicit profits.
According to the court on the 19th, the Seoul Southern District Court Criminal Division 12 (Presiding Judge Yoo Jin-hyun) sentenced Kim, the former CEO of Esmo, who was indicted for violating the Act on the Aggravated Punishment of Specific Crimes (embezzlement), to five years in prison and a fine of 300 million won. Kim is accused of conspiring with Chairman Lee, known as the actual owner of Esmo, to acquire the company through a no-capital M&A, distribute false press releases to boost the stock price, and then sell convertible bonds to gain illicit profits amounting to about 57 billion won.
Kim denied most of the charges during the trial, but the first-instance court acquitted him on some counts and found him guilty on most others.
The court found him guilty of fraudulent unfair trading, false employee salary payments, false service contracts of Esmo, and false employee salaries at Esmo’s Chinese subsidiary. Regarding the use of Esmo’s corporate card, the court ruled that usage before November 2017 was not guilty, but usage after that date was guilty.
The court stated, "The fraudulent unfair trading in this case posed a significant risk of causing great harm to general investors and undermined the fairness of the stock market," adding, "It is a socially serious crime."
It also explained the sentencing by saying, "He denies knowledge of the relationship and role with the actual shareholders and shifts responsibility, and the damage has hardly been recovered."
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