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Doctors, financiers accused of elaborate stock manipulation scheme

Published: 23 Sep. 2025, 16:45

Lee Seung-woo, head of the joint task force on stock manipulation, second from right, briefs reporters on the team’s first case involving unfair trading practices at the Korea Exchange’s Seoul office in Yeongdeungpo District, western Seoul, on Sept. 23. [YONHAP]

Doctors, financiers and private educators are accused of forming an unlikely alliance in one of Korea’s most elaborate stock manipulation schemes, using more than 100 billion won ($71.7 million) to quietly seize control of a Kospi-listed stock — and inflate its price for massive profits, regulators revealed Tuesday.

This is the first investigation by the special joint task force on stock manipulation established after President Lee Jae Myung emphasized a crackdown on unfair market practices, stating, “We must show that stock manipulators risk losing everything — their money, their reputation and their future.”

The Financial Services Commission (FSC), Financial Supervisory Service (FSS) and the Korea Exchange said that a raid was conducted on the residences and offices of seven suspected of involvement in an organized scheme.

Dozens of accounts reportedly used in the stock manipulation scheme were also frozen by the Securities and Futures Commission under the FSC, marking the first time the measure has been applied under an amendment to the Capital Markets Act enacted in April.

The suspects allegedly began orchestrating the scheme in early 2024 and spent nearly 21 months using massive capital to acquire roughly one-third of a single stock and artificially inflate its price through dozens of accounts. They are believed to have secured illegal gains of around 230 billion won ($165 million) and could earn up to 400 billion won if they sold off remaining shares at the inflated price.

The suspects, who are connected through family ties or school alumni networks, reportedly adopted sophisticated tactics to gradually and consistently raise the share price. The wealthy individuals running hospitals and academies in the group are accused of raising more than 100 billion won in funds for the scheme by using corporate capital and mortgage loans.

Three key figures — including a former executive of a well-known private equity firm, a branch manager at a financial institution and an asset management executive — allegedly carried out tens of thousands of manipulative transactions, including fictitious orders, wash trades and price-fixing, during the opening and closing phases of trading.

"A transaction that has no economic gain but is conducted tens of thousands of times at a cost suggests a deliberate attempt to inflate trading volume," a task force official said.

Lee Seung-woo, head of the joint task force on stock manipulation, briefs reporters on the team’s first case involving unfair trading practices at the Korea Exchange’s Seoul office in Yeongdeungpo District, western Seoul, on Sept. 23. [YONHAP]

The group reportedly targeted a low-volume Kospi stock, making it easier to sway the price with smaller trades. As the trading volume and share price steadily increased, retail investors were drawn in, doubling the stock’s value. The suspects allegedly disguised their activity by altering IP addresses and reporting the stock as involved in a management rights dispute.

One of the suspects previously worked with an activist fund, and authorities are probing whether that past experience is connected to the current case.

The task force is also investigating the suspects’ use of special-purpose companies to launder funds. Some members of the group had previous careers as professional investors, though none had prior convictions related to stock manipulation.

The scheme was initially uncovered during routine surveillance by the FSS. After a preliminary probe, the joint task force analyzed the data, and the FSC exercised its authority to conduct a forcible investigation. Regulators plan to complete their probe and impose fines of up to twice the amount of unjust gains.

The joint task force is currently investigating five stock manipulation cases in total.

“We aim to swiftly investigate these cases to root out unfair practices in the market,” an official said.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM SEON-MI [[email protected]]