Seven people caught manipulating theme stocks

The Securities and Futures Commission decided Friday to report three people to prosecutors and seek a criminal investigation into four people on charges of conducting unfair trade of 31 theme stocks.

They used “matching,” in which more than two people traded shares at preset prices and quantities to raise share prices. Through this method, they are known to have attracted investors, raised prices, and cashed out over a short period of time.

One of the suspects, who worked at a securities company until 2005, attracted investors by sending massive orders for shares that looked likely to become theme shares for mass purchase at high prices based on ample funds worth 100 billion won (89 million U.S. dollars).

If investors scrambled to buy the shares in the misjudgement that strong buying existed, the suspect sold shares en masse. Through this method, he made profits of 5.4 billion won (4.8 million dollars) on 30 issues such as AhnLab and EG from August last year through January this year.

Ha Eun-soo, in charge of special investigation at the Financial Supervisory Service, said, “Manipulating stock prices by placing massive orders at the highest prices over a short period is a new method,” adding, “The suspects claimed to be day traders, but they manipulated prices with the intention to induce trading.”

yunjung@donga.com