Prosecutors Estimate 10.4 Billion Won Illicit Gains by Stock Cafe Operator in 'Lower Limit Price Incident'

The prosecution investigating the 'massive limit-down incident involving five stocks' estimated that Kang Mo (52), the operator of an online stock information cafe, gained an unfair profit of 10.4 billion KRW through market manipulation.

Seoul Southern District Prosecutors' Office Photo by Yonhap News

According to the legal community on the 18th, the Seoul Southern District Prosecutors' Office conducted a search and seizure of Kang's residence and office over two days starting from the 15th on suspicion of violating the Capital Markets Act, noting these allegations in the warrant. However, since the investigation is in its early stages, the prosecution believes that the estimated amount of unfair profit and the timing of the crime may change.

The prosecution is focusing on uncovering related suspicions, believing that from January 2020 until last month, Kang manipulated stock prices and gained unfair profits by engaging in practices such as wash trading while trading stocks of several listed companies. Wash trading is a method similar to that used by Ra Deok-yeon (detained and indicted), who was identified as the main culprit in the SG (Soci?t? G?n?rale)-triggered stock price crash incident.

Kang is the operator of the Naver cafe A Investment Research Institute, which was pointed out as the background of the limit-down incident on the 14th. The five stocks whose prices plummeted?Dongil Industry, Dongil Metal, Manho Steel, Daehan Textile, and Banglim?were reportedly frequently mentioned as recommended purchase stocks in the cafe operated by Kang.

The prosecution and financial authorities detected suspicious signs of market manipulation and other irregularities in these stocks even before their prices crashed, monitoring for unfair trading. They intensified the forced investigation immediately after the limit-down incident occurred. The prosecution is analyzing materials secured during the search and seizure to verify the illegality of Kang’s stock trading process and whether there were accomplices.

Previously, Kang denied involvement in market manipulation or stock price manipulation, stating in posts on the cafe he operates that he had only been purchasing stocks over a long period as part of a small shareholder movement.