Investment firm head nabbed over suspected stock manipulation

A key suspect in a large-scale stock manipulation case that has recently shaken the local financial markets was detained by prosecutors Tuesday.

Ra Deok-yeon, head of an unregistered investment consulting firm, was apprehended at his home at around 10:25 a.m. and taken to the Seoul Southern District Prosecutors Office, according to the prosecutors who have formed a joint investigation team with the Financial Services Commission and the Financial Supervisory Service.

The 42-year-old Ra is suspected of having manipulated the prices of some listed stocks through an “order matching” technique after taking over mobile phones and personal information from investors.

Order matching refers to a kind of fictitious transaction in which a buyer and a seller trade stocks at a predetermined price and time. The securities exchange law prohibits order matching, as it can make the concerned stock’s trading volume appear bigger that it really is.

Ra is also accused of concealing parts of the investment proceeds and evading taxes through his business entities, and running an unregistered investment consulting business.

Ra’s firm was at the center of the recent collapse of stock prices of eight companies. The stocks of the eight listed companies had been steadily rising since April of last year but began to plummet last month following mass sell-offs through SG Securities Korea Co., the local branch of the Societe Generale Group of France.

About 100 investors claimed to have lost a combined 100 billion won after entrusting their investments to the investment company.