Prosecutors Probe Police Collusion in KOSDAQ Stock Manipulation Case

Prosecutors in Seoul raided the Gangnam Police Station on March 25, 2026, following allegations that an active-duty police officer leaked confidential investigation details to a suspect involved in a KOSDAQ stock manipulation case.

The operation was carried out by the Financial and Securities Crime Joint Investigation Unit of the Seoul Southern District Prosecutors’ Office, led by Chief Prosecutor Shin Dong-hwan. Investigators conducted search and seizure operations at the police station to secure data related to the alleged leak of probe information.

The raid is part of a broader investigation into a stock price manipulation scheme involving KOSDAQ-listed companies. Prosecutors identified signs that a team leader-level officer at the Gangnam Police Station had colluded with one of the primary suspects, providing convenience to the investigation by disclosing sensitive information regarding the probe and other suspects.

Details of the Stock Manipulation Scheme

The underlying criminal case centers on the alleged manipulation of stock prices by a group that included a wealthy individual identified as Mr. Lee, a former securities firm manager, and a business executive.

Mr. Lee, who is identified as the husband of a well-known influencer and actress, is suspected of acting as the primary financier for the operation. Prosecutors allege that Lee conspired with market manipulation forces, including a former manager of a large securities firm and a businessman, to artificially inflate the value of a KOSDAQ-listed company’s shares.

According to the prosecution, the group utilized wash trading—a process of pre-arranging buy and sell prices and executing trades at predetermined times to create a false impression of market activity. They are further accused of mobilizing customer accounts from securities firms and using borrowed-name accounts to inflate trading volumes.

These activities reportedly caused the company’s stock price to soar from the late 1,000 won range to approximately 4,000 won during the period of manipulation, which began early in 2025.

Legal Proceedings and Police Involvement

The investigation into the financial fraud has already led to several legal actions. Two of the accomplices, the former securities firm manager and the business executive, were arrested and indicted while in custody on January 23, 2026.

While the prosecution continues its investigation into Mr. Lee, the discovery of police collusion has expanded the scope of the probe. The Seoul Southern District Prosecutors’ Office detected circumstantial evidence that the incumbent officer at the Gangnam-gu District Office had engaged in fraudulent activities by informing Mr. Lee of the status of the investigation.

The leak reportedly involved information concerning acquaintances and other suspects linked to the stock manipulation case, potentially compromising the integrity of the ongoing legal process.

The raid on March 25, 2026, was designed to recover evidence of these communications and determine the extent of the officer’s involvement in the collusion.

The Seoul Southern District Prosecutors’ Office is continuing its compulsory investigation to establish the full relationship between the police officer and the suspects, as well as any other potential leaks of investigation confidentiality.