▲ Hana Bank dealing room in Jung-gu, Seoul
The Joint Task Force for Eradicating Stock Manipulation is currently conducting a raid on Alpha AI, a company listed on the KOSDAQ market, on suspicion of reaping over 20 billion won in illicit profits through complex stock manipulation, including false disclosures regarding entry into new artificial intelligence (AI) businesses, it was learned on July 10.
According to financial authorities, the joint task force began the search and seizure operation this morning at the Alpha AI headquarters in Pyeongtaek, Gyeonggi Province, as well as the residences of the company's current and former executives and its largest shareholder.
During a period of "no-capital" mergers and acquisitions (M&A) last year, Alpha AI saw its stock price surge as the acquirer announced plans to enter multiple new AI sectors—beyond the company's existing medical device and healthcare businesses—and actively promoted these ventures.
In July of last year, the company held an extraordinary general meeting of shareholders to change its name from Alpha Nox to Alpha AI and added various AI-related business objectives to its articles of incorporation, including AI system development, large language models (LLM), autonomous driving, humanoid robots, and semiconductor design optimization solutions.
However, in its quarterly report for the first quarter of this year, the company stated, "Although we added business objectives with the goal of diversifying our business, we have not yet been able to pursue these projects in earnest," adding that it "plans to proceed with them through future supplementation."
The suspects are also accused of engaging in market manipulation using separate accounts.
Furthermore, they are suspected of filing false disclosures regarding capital procurement, as the actual use of funds differed from the stated purpose of investing in new AI businesses.
It is reported that authorities are also verifying circumstances suggesting collusion between the acquirer and former management.
In an audit report disclosure filed this past April, Alpha AI announced that it had received a "disclaimer of opinion" from its auditor regarding its financial statements for last year due to limitations in the scope of the audit and uncertainty regarding the company's ability to continue as a going concern.
Under KOSDAQ listing regulations, this constitutes grounds for delisting.
Although a delisting was subsequently decided in the KOSDAQ market, trading is currently suspended due to an objection filed by the company.
This crackdown appears to be a direct strike by the joint task force against stock manipulation by groups involved in no-capital M&As.
No-capital M&A is a method of acquiring a company using borrowed funds or the assets of the target company rather than one's own capital, a practice that has frequently caused issues such as stock manipulation.
Since its launch one year ago, the joint task force has uncovered and investigated over 10 cases, including long-term market manipulation by super-rich individuals, insider trading by high-ranking securities firm executives, and front-running by journalists, and has referred them to the prosecution.
In particular, during a performance review meeting held on July 8, the task force announced that it is currently investigating numerous cases, including market manipulation and front-running, and stated its policy to secure evidence through raids in major cases.
(Photo: Yonhap News)
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