Prosecution Appeals First Trial Verdict in 'Deutsche Motors Stock Manipulation' Case

Kwon Oh-su, Chairman of Deutsch Motors. / Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The prosecution has appealed the first-instance verdict in the 'Deutsche Motors Stock Price Manipulation' case.

According to the legal community on the 16th, the prosecution submitted an appeal to the first-instance court, the Seoul Central District Court Criminal Division 23 (Presiding Judge Jo Byung-gu), regarding nine individuals involved in the stock price manipulation, including former chairman Kwon Oh-soo.

Former chairman Kwon was indicted in October 2021 on charges of conspiring with 'stock price manipulation players,' the 'Boutique' investment advisory firm, and current and former securities company employees to boost Deutsche Motors' stock price by using 157 accounts under 91 different names from December 2009 to December 2012. Securities company employees and stock price manipulation players were also indicted together.

It was investigated that after Deutsche Motors was listed via a backdoor listing at the end of 2008, the stock price fell, and due to demands from investors to raise the stock price, Kwon committed these crimes. Using matched trading methods, the stock price, which was in the high 2000 won range, rose to 8,000 won.

At the sentencing hearing, the prosecution requested the court to sentence former chairman Kwon to eight years in prison and a fine of 15 billion won. They also demanded a confiscation order of approximately 8.13 billion won.

However, on the 10th, the court sentenced former chairman Kwon, who was charged with violating the Capital Markets Act, to two years in prison with a three-year probation and a fine of 300 million won.

The court ruled that acts committed before October 21, 2010, among the overall stock price manipulation charges, were beyond the statute of limitations and acquitted him of those. It recognized some of the remaining market manipulation acts as guilty. The market manipulation acts found guilty in the first trial included 101 cases of matched and fictitious trades and 3,083 cases of actual trades.

The court also stated, "From the perspective of 'seeking capital gains,' the manipulation attempts were judged as failed market manipulation acts for the main manipulators and supply-demand forces," and sentenced most defendants to suspended prison terms.

However, the court sentenced Mr. Lee, a securities company 'stock price manipulation player' who was indicted together, to two years in prison and a fine of 50 million won and ordered his detention. Although he was acquitted or found not guilty of the Deutsche Motors market manipulation charges, he was found guilty of causing damage to a separate corporation, Arion Technology.

The deadline to appeal the first-instance verdict is until the 17th. Former chairman Kwon has not yet submitted an appeal.