Four arrested in South Korea over alleged $72 million stock price manipulation scheme

South Korean authorities have launched a significant crackdown on alleged stock market manipulation, with prosecutors targeting a group of four individuals accused of artificially inflating the share price of DI동일 (DI Dongil). The investigation centers on the alleged use of over 100 billion won (approximately $72 million USD) to execute a sophisticated scheme involving wash trading and fictitious trading.

The accused allegedly manipulated DI동일's stock by orchestrating buy and sell orders among themselves to create a false impression of high trading volume and price appreciation. During the period of manipulation, the stock price reportedly surged by approximately 100%, attracting unsuspecting investors. The group is also suspected of pressuring DI동일's management to enter into treasury stock trust agreements, further aiding their efforts to control and inflate the stock price.

This high-profile case marks the first major investigation undertaken by the "Joint Response Team for Eradicating Stock Manipulation," a unit established following President Lee Jae-myung's emphasis on combating unfair trading practices. The investigation gained momentum after prosecutors, while analyzing seized evidence, uncovered indications that employees at NH Investment & Securities may have leaked crucial information to the alleged manipulators.

Prosecutors have already executed search and seizure warrants at the offices of DI동일 and NH Investment & Securities, and have since expanded their investigation to include KB Securities and Kyobo Securities. The Seoul Southern District Prosecutors' Office has requested arrest warrants for the four individuals, with a court hearing scheduled for July 1st to determine their detention. The scale of the alleged fraud and its status as the inaugural case for the new anti-manipulation task force have drawn significant attention.