South Korean Prosecutors Raid Conglomerate Over Alleged Stock Manipulation

The Seoul Southern District Prosecutors’ Office sent prosecutors and investigators to Ssangbangul’s offices in Seoul’s Jung-gu district to search and seize materials over suspected violations of the Capital Markets Act, Herald Business reported. The operation was conducted by the office’s joint financial and securities crime investigation unit, headed by chief prosecutor Shin Dong-hwan.

The raid marks an escalation of a case that grew out of a complaint filed in January by a special committee of South Korea’s Democratic Party, according to Herald Business. The complaint accused Ahn Bu-su, chairman of the Asia-Pacific Peace Exchange Association, former Ssangbangul Chairman Kim Sung-tae and former Vice Chairman Bang Yong-cheol of breaching securities law.

The complaint was initially submitted to the Seoul Central District Prosecutors’ Office before the Supreme Prosecutors’ Office transferred the matter to the Seoul Southern District Prosecutors’ Office, which handles financial and securities cases, Herald Business reported.

As part of its preliminary inquiry, the Southern District office asked the Korea Exchange to examine trading in about 10 stocks suspected of being connected to potential market manipulation, according to the publication.

Prosecutors said the exchange’s analysis detected indications of irregular trading in a significant number of the securities under review, Herald Business reported. Those findings prompted authorities to move to a broader investigation, including Tuesday’s search.

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The case also intersects with a politically charged dispute over Ssangbangul’s dealings involving North Korea.

The Democratic Party has called for investigators to revisit the circumstances surrounding what is commonly known as the Ssangbangul North Korea remittance case. The party argues that the central issue should be allegations of stock-price manipulation involving the group rather than claims that Ssangbangul paid expenses associated with a proposed North Korea visit by President Lee Jae Myung when he served as governor of Gyeonggi Province, according to Herald Business.

Prosecutors are expected to review documents and other materials obtained in the raid to reconstruct trading activity and determine how any alleged inflation of share prices may have been carried out, Herald Business reported.

Investigators also plan to examine whether Kim and other former or current Ssangbangul figures participated in any manipulation, according to the publication.

The investigation remains at the allegation stage, and the search itself does not establish wrongdoing by the individuals or entities involved.