Prosecutors vow stern punishment against stock manipulation

[Photo by Yonhap]

South Korea’s prosecutors have put six people who used chat rooms and YouTube to allegedly boost shares they bought by recommending them to investors on trial as authorities are showing strong commitment to crack down on growing number of similar unfair trading practices.

The financial investigation division 1 of the Seoul Southern District Prosecutors’ Office announced Thursday that it has indicted and detained two individuals and indicted four others without detention on charges of violating the capital market act. Among those indicted include a famous YouTuber dubbed Super Ant with 550,000 subscribers.

They are accused of making illegitimate gains through stock manipulation by hiding the fact that they had bought certain stocks and using members of leading rooms, which are group chat rooms in messengers that share stock information and recommend stocks, or viewers of YouTube stock channels to take on selloffs or join the forces of stock manipulation.

They also allegedly used funds raised from investors under the guise of high returns and principal guarantees to finance their own stock investments without any approval from financial authorities.

Prosecutors warned that it is a serious illegal offense to provide inside information on a company that has not been disclosed to retail investors or reveal forces of stock price manipulation and that users may also be involved in crimes in the process.

According to the Financial Supervisory Service, complaints of damage related to illegal stock leading rooms surged to 3,070 in 2022 from 1,744 in 2020.

Meanwhile, Prosecutor General Lee One-seok visited the Korea Exchange in central Seoul for the first time as head of the prosecutor’s office. “The public is concerned about the recent SG Securities Korea Co. scandal and market confidence is shaken,” Lee said. “Unfair trading practices are a serious crime that undermine the trust of the capital market and plunder the property of market participants, including small investors. We will eliminate the motivation and incentives for criminal behaviors to send the message that individuals will be dealt with an exemplary punishment even if they engage in unfair trade practices just once.”