A full-time retail investor known as a "super ant" has been sent to trial on charges of manipulating the share price of a KOSDAQ-listed company for more than three years, using borrowed money to amplify his trades.
The Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office, headed by Chief Prosecutor Kim Min-gu, said on the 18th that it had indicted and detained a full-time investor identified as A on charges of violating the Financial Investment Services and Capital Markets Act. Another full-time investor, identified as B, who helped A manipulate the stock, was indicted through summary proceedings on charges of aiding the violation.
Prosecutors allege that A continuously bought shares in the KOSDAQ-listed company to manipulate its price over about three years and five months, from January 2020 to May 2023. Prosecutors put A's illicit gains at 6.2 billion won ($4.5 million).
The investigation found that A approached 26 people, including business owners and doctors he met at high-end wine and dining gatherings, promising to share investment profits with them, and obtained 47 securities accounts, six contract-for-difference (CFD) accounts and investment funds from them. Money borrowed from cryptocurrency dealers and private moneylenders came to 12 billion won.
On top of the funds gathered this way, A used various forms of leverage — margin loans, stock-collateralized loans and CFDs — to buy a total of about 340 billion won worth of shares. In the process, he placed more than 15,000 manipulative orders, and the stock climbed from 11,800 won to 51,100 won.
The investigation found that A spent the criminal proceeds from the manipulation on costs for a luxury spa business run by the woman he lived with, as well as on living expenses. He was also found to have led a lavish lifestyle, living in an upscale 'villa' — a Korean term for a low-rise multi-unit residential building, not a Western-style detached luxury house — and running up monthly credit card bills of 20 million to 30 million won.
But when the share price began falling in May 2023, the excessive leverage came back to haunt him. As brokerages successively liquidated A's holdings over insufficient collateral, the stock plunged from 45,800 won to 22,050 won in just four days.
The Financial Supervisory Service detected signs of the scheme while monitoring stocks suspected of price manipulation and referred the case to prosecutors in October last year. Prosecutors secured recordings of phone calls between A and B through search and seizure operations and asked the FSS for further analysis of the manipulation patterns to build out the case.
"We will continue to work closely with related agencies such as the Financial Supervisory Service and the Korea Exchange to respond firmly to financial and securities crimes and to establish transparency and soundness in the capital market," a prosecution official said.
