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| Ra Deok-yeon, a key suspect in the latest stock manipulation scandal, is taken to a court in Seoul, May 11. Yonhap |
Watchdogs investigate 10-year stock transaction record
By Lee Min-hyung
Securities firms are moving to seek a provisional attachment for the financial assets of Ra Deok-yeon, the head of an unauthorized investment consulting company, after the firms suffered losses in the latest stock manipulation scandal.
Last week, a Seoul court allowed Hana Securities to provisionally seize Ra's deposit money ― worth 3.29 billion won ($2.45 million) ― at five local commercial banks. Earlier this month, Samsung Securities also conducted the same measures on the bank and securities accounts of Ra.
Local brokerage houses have been unexpectedly hit by the latest financial fiasco triggered by an abrupt fall of eight listed shares here late last month. As Ra also suffered losses from the abrupt stock fall, the brokerages are fearing that he might fail to repay the money related to the trade of contracts for difference (CFD). CFD trading comes with the substantial risk of losing money extremely rapidly due to leverage.
For now, CFD trading and its inherent risk is available with a group of 13 securities firms here. As of the end of March, Kyobo Securities topped the list in terms of the balance of CFD transactions with 618 billion won. Kiwoom Securities came in second with 557.5 billion won.
Financial authorities have launched an investigation into all the stock transaction data for the past decade, in a move to track down any unfair or illegal trading acts and develop countermeasures.
The Financial Services Commission (FSC) and the Korea Exchange will team up to look into any similar forms of suspicious stock manipulation in the local stock market.
This is a follow-up measure to the FSC's investigation into some 3,400 accounts involved in CFD transactions.
"After receiving all the data on CFD-trading accounts from authorities, we will do our best to look deeper into their trading patterns and build a more strict monitoring system," Korea Exchange Chairman Sohn Byungdoo said during a recent meeting at the National Assembly.
In response, the exchange operator plans to introduce tighter standards when designating stocks suspected of being targeted for manipulation. For now, the authority monitors 100-day trading records when classifying such stocks into the category. But it is considering an expansion of the monitoring period to a year.
Political circles also urged the financial authorities to find suspects involved in any previous stock manipulation cases.
"I do not think Ra is the first designer of the recent manipulation scandal," Rep. Yun Chang-hyun of the ruling People Power Party said. "We need to find and root out previously successful stock manipulation projects while reforming the market monitoring system and inspecting the 10-year transaction records of the local stock market."
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