Travel ban slapped on website operator after stock prices plunge

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Travel ban slapped on website operator after stock prices plunge

Electronic sign boards at Hana Bank in central Seoul show Korea’s market Thursday. [YONHAP]

Electronic sign boards at Hana Bank in central Seoul show Korea’s market Thursday. [YONHAP]

 
The prosecution ordered Thursday an overseas travel ban for the operator of an online community suspected of involvement in the recent plunge of five stocks.
 
The five stocks in question — Pangrim, Dongil Industries, Manho Rope & Wire, Taihan Textile and Dongil Metal — fell to a daily lower trading limit of 30 percent on Wednesday.
 
Around 500 billion won ($390.6 million) in market capitalization evaporated from the market that day.
 
Founded in 2012, the online community recommends stocks to retail investors. The website had steadily recommended the five stocks in question.

 
Last year, the Supreme Court gave the community operator a four-year suspended sentence for manipulating stock prices from Feb. 2014 through Aug. 2015.
 
The Financial Services Commission (FSC) suspended the trading of the companies on Thursday. The regulators added Dongil, Pangrim and Manho to the investment caution list after they were intensively traded on a small number of accounts.  
 
The five companies denied the stock plunges were connected with unfair trading in a regulatory filing Thursday.  
 
The community operator said Thursday that he is being wrongly accused.    
 
The Financial Supervisory Service (FSS) “expanded personnel dedicated to investigations and restructured the organization in a bid to crack down on market disturbances and raise investor trust,” said Gov. Lee Bok-hyun on Thursday.  
 
Lee said the FSS will strengthen investigations on unfair trades and supervise illegal chat rooms, where certain stocks are recommended in return for paid membership fees.  
 
The financial regulators are investigating the alleged price manipulation of eight stocks that fell to the daily trading limit for almost a week in April. The stocks included Kospi’s Seoul City Gas, Daesung Holdings and Daol Investment & Securities.  
 
The stocks plummeted following the liquidation of contracts for differences, a leveraged derivative that allows investors to trade without paying for their full value. The scheme was revealed when the Paris-based Societe Generale Securities began unloading a huge number of shares.

BY JIN MIN-JI [jin.minji@joongang.co.kr]
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