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FSS to investigate Kiwoom for stock price crash caused by Societe Generale

FSS to investigate Kiwoom for stock price crash caused by Societe Generale

Posted May. 04, 2023 07:56,   

Updated May. 04, 2023 07:56


The Financial Supervisory Service (FSS) began an investigation of Kiwoom Securities to look into the contract for differences (CFD) process, which is pointed as the cause of the stock price crash caused by Societe Generale SA. The FSS will also investigate if Daou Kiwoom Group Chairman Kim Ik-rae was aware of potential stock price manipulation in advance.

According to the financial circles on Wednesday, the FSS began investigating the CFD of Kiwoom Securities on Wednesday morning. Investigations of other major securities firms will be followed. Typically, the FSS’s investigation of a financial company is conducted for two weeks and can be extended, if necessary. The financial authorities reported on an investigation plan for CFD-related securities firms during a Tuesday closed meeting of the National Assembly’s National Policy Committee.

The FSS will investigate if Kiwoom Securities used its clients’ order information and whether the company’s executives and staff members were involved in the CFD. As of the end of February, Kiwoom Securities’ CFD balance is 518.1 billion won, which is the second highest after Kyobo Securities with 613.1 billion won. Whether the company faithfully complied with requirements and regulations for individual professional investors is also subject to investigation.

The FSS will look into whether Ra Deok-yeon, chairman of an H investment consulting firm, and Chairman Kim were involved in the stock price manipulation. Chairman Kim is suspected to have been aware of the stock price manipulation as he sold 1.4 million shares outside normal trading hours on April 20, right before the stock price of Daou Data crashed.

Prosecutor General Lee Won-seok was briefed by the chief prosecutor of the Seoul Central District Prosecutors' Office Yang Seok-jo on Wednesday regarding the investigation status of the stock crash and future plans.

“Those involved in the stock crash and the beneficiaries of unfair gains should be thoroughly identified and face strict punishment,” said Lee. “We will organically cooperate with the financial authorities to investigate the crime of unfair trade that caused massive losses to investors.”

wskang@donga.com · koo@donga.com