A ring propped up eight Korean stocks with CFD leverage — then they all crashed together

From May 2019, Ra Deok-yeon ran an unregistered investment club, Hoan Investment Advisory, that pooled client money into eight mid-cap Korean stocks. Instead of buying shares directly, the group traded them as contracts for difference (CFDs) through the Seoul brokerage of Societe Generale — an over-the-counter derivative that let a foreign bank's account, not the client's name, sit on the exchange's order book. That structure hid who actually controlled the stock and let 40% margin fund roughly 2.5x leverage.

For nearly two years the group used matched orders — coordinated buying and selling among its own accounts at prices it chose — to keep the eight stocks rising steadily rather than spiking, the pattern regulators later said was designed to look like ordinary demand rather than a pump. Some of the shares gained well over 100% year-on-year by April 2023 while trading volume stayed thin, a combination that only works as long as new buying keeps arriving to cover the leveraged positions underneath it.

On 24 April 2023, sell orders through SG Securities' Korea desk hit the market and could not be absorbed. All eight stocks fell to their daily limit-down, and several stayed locked at limit-down for multiple consecutive sessions as forced liquidation of CFD collateral cascaded through the same accounts that had been propping the prices up. Korean regulators opened a market-wide investigation into CFD trading through foreign brokerages within days.

Prosecutors said the scheme generated about 737.7 billion won in illegal profit before it unwound, on top of roughly 194.4 billion won collected as unregistered management fees. A trial court sentenced Ra to 25 years in prison with a 146.5 billion won fine and 194.5 billion won in forfeiture; an appellate court cut that to 8 years in November 2025, and in May 2026 South Korea's Supreme Court overturned the reduced sentence, ruling that CFD orders routed to conceal ownership can themselves constitute market manipulation under the Capital Markets Act, and sent the case back for retrial.