[La Deok-yeon Gate] Prosecution Investigates 'SG Incident' Stock Manipulation Extending to Local Organizations

Investigation Focused Mainly on the Seoul Metropolitan Area
Also Monitoring Regional Organizations
"Classifying Participants Based on Evidence Proving Headquarters' Guilt"

The prosecution investigating the 'Soci?t? G?n?rale (SG) Securities Stock Price Crash Incident' is reportedly identifying local stock manipulation groups related to CEO Ra Deok-yeon and Hoan.

According to Asia Economy's report on the 2nd, the Seoul Southern District Prosecutors' Office Joint Investigation Team on Financial and Securities Crimes (Chief Dan Sung-han) believes that Ra Deok-yeon’s group had regional organizations not only in Seoul and the metropolitan area but also in Ulsan, Gwangju, Jeju, and Daegu, recruiting investors whose funds were also used for stock manipulation.

[Image source=Yonhap News]

Earlier, in Gyeongsan, Gyeongbuk, a man in his 40s was found dead last month on the 6th at the home of a woman named Kim, suspected to be a recruiter in the Daegu-Gyeongbuk area. Kim claimed close ties with CEO Ra’s younger sister while recruiting investors in the region.

The prosecution has identified Ra’s organization as consisting of a headquarters team in Seoul and local teams, each composed of sales teams and stock trading teams. Overall, the structure is such that when the local teams attract investment funds, the money flows to the headquarters. The prosecution believes that investigating the headquarters’ financial flows will enable them to understand the local teams. A prosecution official stated, "If we secure evidence and prove charges centered on the headquarters, those under them will be classified as participants in the charges," adding, "Once the investigation of the headquarters is concluded, the local teams can be categorized and held accountable accordingly."

Currently, the prosecution is focusing on the Seoul headquarters and the metropolitan area to bring the main culprits to trial or secure their custody. On the 26th, the prosecution arrested and indicted CEO Ra, his closest aide Byun Mo (40), and former professional golfer Ahn Mo (33) on charges of violating the Capital Markets Act and the Act on Concealment of Criminal Proceeds. CEO Ra orchestrated the overall stock manipulation and directed trades, Byun managed the entire operation, and Ahn recruited large investors.

Subsequently, on the 1st, accomplices Jang Mo (35), Park Mo (37), and Cho Mo (41) were also arrested on the same charges. Judge Kim Ji-sook of the Seoul Southern District Court, responsible for warrants, issued the arrest warrants citing "risk of flight and evidence tampering." The prosecution expects that investigating these individuals’ criminal activities will clarify the structure of the local organizations. While the three previously arrested and indicted individuals oversaw the entire operation, the three newly arrested accomplices handled specific practical tasks.

Within the stock manipulation group, Jang was in charge of finance and managing criminal proceeds, Park oversaw the stock trading team responsible for price manipulation, and Cho managed investor recruitment and client relations. Ra Deok-yeon’s group is accused of illicitly gaining 730.5 billion KRW through 'matched orders'?a stock manipulation method involving buying and selling stocks at predetermined prices?from May 2019 to April this year. They are also charged with illegally attracting discretionary investment clients from January 2019 to last April and managing Contracts for Difference (CFD) accounts under clients’ names, earning 194.4 billion KRW in illicit profits.

Additionally, from April 2020 to last April, the group is accused of disguising approximately 194.4 billion KRW of criminal proceeds earned as commissions by making card payments at corporations where the group members were registered as inside directors or representatives, such as restaurants and golf courses, or by managing the funds through nominee accounts. So far, the prosecution has seized and preserved 15.2 billion KRW of Ra Deok-yeon’s criminal proceeds.

※ This SG Securities stock price crash incident has sounded an alarm for the order of the capital market. Readers’ tips will be a great help in uncovering the truth. We welcome any information regarding investment damage cases, stock manipulation and asset concealment by Ra Deok-yeon’s group, the background of large-scale sales by major shareholders of Dow Data and Seoul Gas, or any other related matters (jebo1@asiae.co.kr). Asia Economy will do its utmost to establish a transparent capital market order.