[La Deok-yeon Gate] First Trial of SG Incident... Court: "Will Hold Accountable for Market Manipulation"

Ra Deok-yeon Admits Only Minor Charges
Court Plans to Consolidate Co-defendant Trials

Ra Deok-yeon, the main culprit behind the ‘SG Securities-triggered stock price crash,’ denied allegations of market manipulation in court. He continued to argue in the courtroom, as he did before his arrest, that "finding the cause of the stock price crash is the key."

[Image source=Yonhap News]

The Criminal Division 11 of the Seoul Southern District Court (Presiding Judge Jeong Do-seong) held the first trial on the 29th for Ra and his close associates, Byun Jeong-su, CEO of Hoan FG, and Ahn Jeong-jin, CEO of Signature Golf. Ra claimed, "Although I instructed stock purchases that could be misunderstood as market manipulation, I had no intention to manipulate the market and did not do so." However, he admitted to the unregistered investment discretionary business charge from the start and acknowledged only the parts of the crime proceeds concealment charge that arose from the illegal investment discretionary business.

Ra and his group were arrested and indicted on charges of violating the Capital Markets Act (market manipulation, unregistered investment discretionary business) and the Act on the Aggravated Punishment of Specific Economic Crimes (concealment of criminal proceeds). They are accused of manipulating the stock prices of eight listed companies, including Samchully and Dow Data, through collusive trading from May 2019 to last April, using funds raised from investors (market manipulation under the Capital Markets Act).

Additionally, from January 2019 to last April, they are charged with attracting investment discretionary clients without financial investment business registration, managing CFD accounts on behalf of clients, and earning unfair profits amounting to approximately 194.4 billion KRW (illegal investment discretionary business under the Capital Markets Act). They are also accused of using fees received from investors between April 2020 and last April to pay for golf courses, restaurants, and other corporations to disguise these as sales revenue or receiving payments through nominee accounts (concealment of criminal proceeds under the Act on the Aggravated Punishment of Specific Economic Crimes).

Suspicions arose that Ra and his group manipulated stock prices by buying and selling stocks through mobile phones and stock accounts opened under investors’ names. Over 200 mobile phones were seized before Ra’s arrest. To evade authorities’ IP (Internet Protocol) tracking, Ra’s group conducted transactions from various locations such as investors’ homes or workplaces. The CFD accounts opened during this process are suspected to have been used as a means of stock price manipulation.

Regarding the opening of CFD accounts, Ra stated, "CFD accounts do not involve buying or selling stocks in the investor’s name; when buy or sell orders are placed, the securities company executes the trades. In this case, investors do not conduct stock transactions under their own names, so they do not have to pay capital gains tax or acquisition tax. CFDs were used to ensure anonymity."

While adjusting the date for the next trial, the court emphasized, "What is clear is that this case is not about holding responsibility for the stock price crash but about whether the stock prices of related companies were artificially inflated before the crash and whether criminal proceeds were received and concealed."

The prosecution is continuing investigations into the crash as well. When asked by the court whether investigations into the crash are ongoing, the prosecution responded, "We are analyzing the entire situation."

Meanwhile, three others indicted and detained on the same charges?Park, in charge of overall stock trading; Jang, responsible for finance and criminal proceeds management; and Jo, responsible for investment attraction and client management?also appeared at the trial. They will present their opinions on the charges at the next hearing. The court plans to consolidate the trials of Ra’s group and these three individuals.

※ The SG Securities-triggered stock price crash 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, suspicions of Ra Deok-yeon’s stock manipulation and asset concealment, insider details on the large-scale sales by major shareholders of Dow Data and Seoul Gas, or any other related matters (jebo1@asiae.co.kr). Asia Economy is committed to establishing a transparent capital market order.