Prosecutors Raid Securities Firms in 100 Billion Won 'DI Dongil Stock Manipulation' Case
Investigation Accelerates on First Major "Stock Price Manipulation Ruin" Case
Prosecutors, who are investigating a stock price manipulation case involving financial experts and minority shareholder activists with a total value of about 100 billion won, have launched another round of compulsory investigations targeting major securities firms.
According to the legal community on June 19, the Financial and Securities Crime Joint Investigation Division of the Seoul Southern District Prosecutors' Office, led by Chief Prosecutor Shin Donghwan, conducted raids on the headquarters of KB Securities, NH Investment & Securities, and Kyobo Securities on suspicion of violating the Capital Markets Act and other charges.
This case began in earnest after the Financial Services Commission's Securities and Futures Commission filed a complaint with the prosecution in March, accusing 11 individuals—including wealthy investors, employees of financial companies, and minority shareholder activists—and four corporations. The suspects are accused of targeting DI Dongil, a KOSPI-listed company, and manipulating its stock price by mobilizing corporate funds under their control and loans from financial firms. They allegedly pressured the DI Dongil management into signing a trust contract to acquire its own shares under the pretext of minority shareholder activism, then managed the stock price to attract investors. At the time, the buy orders placed by the suspects accounted for one-third of the total market volume for this stock.
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This case also drew attention as the first major stock price manipulation case handled by the newly established joint response team, which was launched after President Lee Jaemyung emphasized the eradication of unfair trading. On May 28, prosecutors conducted a previous round of searches and seizures at NH Investment & Securities and DI Dongil.
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