'Deutsche Stock Manipulation' Kwon Osu 2nd Trial Begins

The first trial of the second instance for former Deutsche Motors Chairman Kwon Oh-soo, who was sentenced to a suspended prison term in the first trial on charges related to 'stock price manipulation,' began on the 30th.

Kwon Oh-soo, former chairman of Deutsch Motors, who was sentenced to imprisonment in the first trial on suspicion of 'stock price manipulation,' is heading to the courtroom to attend the first hearing of the second trial held at the Seoul High Court in Seocho-gu, Seoul, on the morning of the 30th.
[Image source=Yonhap News]

On the morning of the day, the Criminal Division 5 of the Seoul High Court (Chief Judge Seo Seung-ryeol) held the first appellate trial for Kwon and eight others, who were indicted on charges of violating the Capital Markets Act.

Former Chairman Kwon, upon appearing at the court, did not respond at all to reporters' questions such as 'whether he admits to informing First Lady Kim Geon-hee about the stock price manipulation' and 'what he thinks about the stock price manipulation charges,' and headed straight to the courtroom.

Previously, Kwon was prosecuted on charges of conspiring with stock price manipulation players, a 'boutique investment advisory firm,' and securities company executives and employees to manipulate stock prices from 2009 to 2012 after the company's stock price fell.

The first trial ruled that among the five stages of the crime divided by the prosecution according to the timeline, the entire first stage, where the stock price manipulation forces collected shareholders' stocks, and part of the second stage, where the stock price was artificially raised, were subject to the statute of limitations. However, it recognized some of the remaining price manipulation, including 101 cases of fictitious transactions and 3,083 cases of real transactions, as guilty.

The first trial sentenced former Chairman Kwon to two years in prison with a three-year suspension and a fine of 300 million KRW. Among those indicted together, five who were found to have conspired also received suspended prison sentences or fines. Mr. Son and Mr. Kim from Jeonju were acquitted as their involvement was not recognized. Player Lee, who was charged with separate stock price manipulation unrelated to Deutsche Motors, was sentenced to two years in prison without suspension.

The first trial court stated, "It is judged that the main motive for the artificial stock price management by former Chairman Kwon was the business management necessity such as new business ventures of Deutsche Motors," and added, "It is also recognized as culpable that he arbitrarily manipulated prices using accounts entrusted by acquaintances or investors." It also said, "From the perspective of seeking capital gains, it was a 'failed price manipulation' act for the main players and supply-demand forces."

The prosecution, which had sought an eight-year prison sentence along with a fine of 15 billion KRW and a confiscation of about 8.136 billion KRW against former Chairman Kwon, appealed the first trial verdict. Former Chairman Kwon, who denies the charges, also appealed.

This case began with an investigation after the Open Democratic Party filed a complaint in April 2020, suspecting that First Lady Kim was the 'jeonju' (fund provider) in the stock price manipulation process. The prosecution indicted Kwon and his associates in December 2021 but excluded First Lady Kim, stating that the investigation on her was ongoing.

Suspicions involving First Lady Kim resurfaced when the first trial court acknowledged that some of her accounts were used in the stock price manipulation. During the trial, evidence emerged that accounts in the name of First Lady Kim were used for stock trading by Kwon and his associates. The first trial judged that three accounts of First Lady Kim and one account of her mother, Choi Eun-soon, were used as nominee or entrusted accounts involved in the guilty price manipulation acts. First Lady Kim has been suspected of playing the role of 'jeonju' by lending stock accounts in stages 1 and 2 of the crime.

At the end of last month, the National Assembly plenary session designated the special investigation bill on First Lady Kim Geon-hee's stock price manipulation allegations, led by the Democratic Party of Korea, as a fast-track agenda. The prosecution, investigating whether First Lady Kim was aware of and involved in the stock price manipulation, recently summoned former Chairman Kwon to question him about related matters.