Seoul, Sep 23 Super-rich individuals and former financial firm officials have been caught orchestrating a massive stock manipulation scheme, financial authorities said on Tuesday, as part of an extensive probe into unfair trading aimed at rooting out illegal market activity.
The Financial Services Commission (FSC), Financial Supervisory Service (FSS) and Korea Exchange said they conducted raids on more than ten locations, including the homes and offices of seven suspects, who had used large sums of money to manipulate stock prices, reports Yonhap news agency.
The suspects allegedly mobilised over 100 billion won (US$71.7 million) in corporate funds and financial institution loans to lure investors through high-volume, fictitious orders over about 21 months from early last year, earning around 23 billion won in profit.
The group includes operators of general hospitals and large academies, as well as officials from a major private equity fund and financial firms.
It marks the first case handled by the recently launched joint task force established by the financial agencies, created to crack down on unfair trading in line with President Lee Jae Myung's push for stricter enforcement.
Based on the investigation, the task force plans to impose fines of up to twice the illicit gains and actively enforce punishable measures, such as restrictions on financial product trading and appointment as executives of listed companies, to establish a "one-strike-out" precedent.
During a recent press conference, Lee warned of strict penalties for stock manipulation and false disclosures, stating, "We need to make it clear that stock manipulation leads to ruin."
Meanwhile, South Korean stocks narrowed earlier gains late on Tuesday morning as investors cashed in profits from the recent market rally.
The benchmark Korea Composite Stock Price Index (KOSPI) had risen 9.16 points, or 0.26 percent, to 3,477.81 as of 11:20 a.m.
Leading tech giant Samsung Electronics moved up 1.08 percent, and SK hynix added 1.42 percent.
Carmakers traded higher as well, with Hyundai Motor rising 0.46 percent and Kia increasing 0.1 percent. Auto parts maker Hyundai Mobis, on the other hand, shed 0.48 percent.
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