Ra Deok-yeon "Daou Data was acquired since late summer last year"

"Bought when stock price was around 14,000 to 15,000 won"
Chairman Kim Ik-rae purchased Dow Data between June and September last year
Kiwoom Securities sued CEO Ra for defamation... CEO Ra also plans to file a damages claim lawsuit

CEO Ra Deok-yeon, who was booked by the prosecution in connection with the crash caused by Soci?t? G?n?rale (SG) Securities.
[Image source=Yonhap News]

Ra Deok-yeon, CEO of H Investment Consulting, a key figure suspected of stock manipulation related to the Soci?t? G?n?rale (SG) Securities-driven stock price crash, revealed that "I started buying Dow Data shares around late summer or autumn last year." In a phone interview with Asia Economy on the 2nd, CEO Ra said, "I don't remember exactly, but I started purchasing Dow Data shares around late summer or autumn when the stock price was around 14,000 to 15,000 won."

The period around last autumn is not much different from the time when Kim Ik-rae, chairman of the Dow Kiwoom Group, whom Ra's side pointed to as the mastermind behind this crash, purchased Dow Data shares. According to the Financial Supervisory Service's electronic disclosure system, Chairman Kim bought 34,855 shares of Dow Data from June 23 to September 26 last year.

The stock price of Dow Data rose to the 14,000 won range on September 21, fluctuated, and then showed an upward trend to 15,050 won (October 26), 21,100 won (November 15), and 30,500 won (December 2). After soaring to 53,200 won on February 7, it maintained the 50,000 won range before plummeting on the 24th of last month due to the SG Securities-driven stock price crash. Two trading days before the crash (April 20), Chairman Kim sold 1.4 million shares (3.65%) of Dow Data through a block deal (off-hours large-volume trade) at 43,245 won per share, cashing out 60.543 billion won.

CEO Ra, who stated that the investment including leverage was about 2 trillion won, said, "We basically buy stocks," adding, "If there are investors who want to sell, we partially sell, but in my judgment, this is not a prearranged trade." He claimed there was no prearranged trading or market manipulation where buying and selling prices are predetermined to inflate stock prices. According to Article 176, Paragraph 1, Item 1 of the Capital Markets Act, prearranged trading, where parties agree in advance to buy and sell securities or on-exchange derivatives at the same price or agreed terms simultaneously, is prohibited.

Instead, CEO Ra pointed to Chairman Kim Ik-rae as the cause of the stock price crash. He claimed, "Chairman Kim's side held a short selling position worth 150 billion won when the Dow Data stock price was around 50,000 won," and "They were incurring losses due to the stock price increase."

Ra raised suspicions about the short selling that continued during the stock price rise. He said, "Since December last year, about 80 billion won worth of short selling has continued on Dow Data," and "It needs to be verified whether the margin required for short selling was secured" (Dow Data was designated as a short-selling overheated stock on December 2 last year). He added, "When conducting short selling, margin must be deposited with securities firms, but it is customary to execute short selling without depositing margin," and emphasized, "Chairman Kim's accounts must be investigated." He also added, "Chairman Kim was about to inherit, so he probably did not want the stock price to rise."

The financial investment industry does not seem to agree with CEO Ra's claims. The very act of Chairman Kim borrowing others' stocks to take a short selling position instead of his own shares to save on inheritance tax can raise suspicion. Moreover, there are reports that Chairman Kim has effectively completed the transfer of shares to his son. Chairman Kim's side denies knowing CEO Ra and strongly denies any involvement with stock manipulation groups.

As the claims between CEO Ra and Chairman Kim's side diverge, legal battles continue. While victims of the stock price crash have filed fraud charges against CEO Ra, he said he would file a damages lawsuit against Chairman Kim Ik-rae. In response, Kiwoom Securities filed a complaint with the police on the 2nd, accusing CEO Ra of defamation by spreading false information.

This stock manipulation suspicion arose after eight stocks, including Dow Data, Samchully, Seoul City Gas, and Seongwang, hit daily lower limits continuously from the 24th of last month due to sell orders from SG Securities. Authorities believe that stock manipulation groups recruited investors and inflated stock prices through prearranged trades using mobile phones and securities accounts under these investors' names.

The joint investigation team of the Seoul Southern District Prosecutors' Office began investigations on the 2nd by booking at least six key suspects, including CEO Ra. When asked if he had received a summons, CEO Ra said, "(There are many missed calls) but I have not been contacted yet." He appeared relaxed, saying, "Since it will be recorded anyway, ask me again if you have any questions."