Unfair trading groups that artificially inflated stock prices by using fake business plans and false fundraising claims, then pocketed hundreds of billions of won in illicit profits, have been caught by financial authorities.
According to the Securities and Futures Commission under the Financial Services Commission on the 9th, at the 3rd regular meeting held last month, a series of fraudulent acts by such unfair groups were detected, and it was decided to refer the case to the prosecution and impose fines.
These groups acquired KOSDAQ-listed companies by mobilizing multiple investment associations, then created a false appearance of pursuing themed new businesses such as electric vehicles and aerospace. They also promoted large-scale fundraising success through issuing private convertible bonds (CB) and bonds with warrants (BW), artificially raising stock prices, and then sold their holdings at high prices to gain hundreds of billions of won in illicit profits.
A Securities and Futures Commission official explained, "We judged that these unfair trading acts seriously violate the fairness and trust of the capital market and can cause damage to many general investors, and took strict measures according to relevant laws."
In particular, these unfair groups, during the process of acquiring management rights of several listed companies, concealed the actual acquiring entities and acquired stocks by splitting them under the names of multiple investment associations to create a structure that allowed free sale of shares. They also concealed stock holding details and falsely reported the holding purpose as ‘simple investment.’ As a result, they were able to avoid mandatory holding periods, boost stock prices, and realize profits by selling at high prices.
Furthermore, despite having no concrete plans to pursue new businesses, they announced themed new business initiatives unrelated to the core businesses of the acquired companies, such as electric vehicles and aerospace, to attract investor interest, and distributed press releases pretending that new businesses were underway by signing unclear memorandums of understanding (MOUs).
A Securities and Futures Commission official said, "Mezzanine securities such as CBs and BWs are important financial instruments that support companies in flexibly raising necessary funds, but many cases of unfair trading groups using them to disrupt the market have been detected," urging investors to be cautious. The financial authorities are also considering selecting related issues as key audit topics announced every June.
The unfair groups detected this time consist of habitual offenders and were confirmed to have attempted fraudulent trading activities targeting multiple listed companies, including this case, during 2021?2022.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
