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.

The group used matched orders and 40% margin to keep prices rising, but when leverage broke, all eight hit limit-down, costing 737.7bn won in illegal profit.

CFDs let the group's real position sit inside a foreign brokerage's account, not the client's name, so nobody could see that related accounts controlled the float in all eight stocks.

40% margin financed roughly 2.5x leverage, so a decline that cash holdings could absorb instead triggered automatic collateral calls that forced selling into a market with no other buyers.

Matched orders kept the price path smooth and upward for two years, which made the stocks look like ordinary steady gainers rather than concentrated, thinly-traded positions.

Once one position was liquidated, the linked accounts across all eight names sold at once, because the same leverage and hidden ownership connected every stock in the scheme.

Leverage that is invisible to the market is still leverage. Hiding ownership behind a broker's account doesn't remove the collateral call — it just delays when everyone else finds out.

South Korea's regulators suspended new CFD accounts and, from September 2023, required a minimum five-year, 300-million-won average trading balance to qualify, along with public disclosure of CFD balances by stock and investor type — rules modeled on existing margin-trading disclosure. Ra Deok-yeon's case remains in retrial after the Supreme Court's May 2026 reversal; 25 people connected to the scheme were tried altogether.