[Reporter’s Notebook] Why Was Yeongpung Paper Targeted in the '660 Billion Won' Stock Manipulation?

Son Sun-hee, Social Affairs Reporter

The market capitalization, which was 180 billion won, surged to over 2 trillion won within a few months, only to shrink back to around 100 billion won in just a week. This happened at Yeongpung Paper, a KOSPI-listed company last year. The mastermind behind the stock manipulation scheme, Mr. Lee, who fled immediately after the incident, was fortunately recently captured and indicted. The prosecution took this opportunity to compile their investigation results and made an interim announcement.

However, some questions remain unanswered. Among approximately 2,700 listed companies, why was Yeongpung Paper specifically targeted? Dongwoo Ha, head of the Financial and Securities Crime Joint Investigation Division at the Seoul Southern District Prosecutors' Office, explained, "To be an easy target for stock manipulation, a company should have a relatively small trading volume, a significant proportion of shares held by a major shareholder that is not actively traded in the stock market, and the company should not be large in size." He added, "Yeongpung Paper appears to meet these conditions."

This is a valid point. The stocks targeted in the Soci?t? G?n?rale (SG)-triggered stock crash incident also shared these conditions. This was to allow small groups to manipulate the stock prices of listed companies with limited funds. However, while the group led by Ra Deok-yeon selected eight stocks based on these criteria, Mr. Lee's group targeted only Yeongpung Paper, which is a notable difference.

The peculiarity of the Yeongpung Paper case lies here. There is a possibility that Mr. Lee's group approached the company with the intent to inflate the value of their shares. The timing of the stock manipulation coincides exactly with when Daeyang Metal acquired Yeongpung Paper. Daeyang Metal borrowed money to acquire Yeongpung Paper, whose market capitalization was more than twice as large at the time. This is known as a 'no-capital merger and acquisition (M&A).' Subsequently, as Yeongpung Paper's stock price skyrocketed, the value of the shares held naturally increased. Because of this, strong suspicions arose in the market that the Daeyang Metal owner family was involved in the incident. However, the prosecution's investigation announcement did not mention the company owners or related parties at all. They only described Mr. Lee as the 'main culprit' and emphasized that the amount of illicit gains reached 661.6 billion won. The company's stock price soared 14 times in a flash?did the owners and related parties really not know? Does the prosecution's investigation truly approach the core of the incident?

Prosecutor General Won-seok Lee said last year, amid a series of stock manipulation crimes, "We will instill the awareness that engaging in unfair trading leads to ruin." In keeping with that promise, the investigation into the Yeongpung Paper case must leave no doubts. It is essential to thoroughly identify who Mr. Lee originally conspired with to target Yeongpung Paper and who profited in the process. The market is still demanding to know the main culprit.