Let's look at the actual data.
Combining Keum's (2024) study with RaymondsRisk's analysis, a consistent structure emerges in the CB repetitive issuance pattern of KOSDAQ small-cap stocks.
This is not a story about a specific company. It's a story about a repeating pattern.
Pattern 1 — Issue 2-3 CBs within 3 years
Typical flow:
1st CB: “Funding for growth” → Conversion price set
- 2nd CB: After stock price falls → conversion price lowered through refixing
- 3rd CB: Another nominal → Cumulative dilution effect increases exponentially
For each CB issue:
Minimize disclosure (non-disclosure possible in case of private issuance)
- The acquirer appears under a new corporate name each time.
- However, when connecting DART, the same executives and networks appear repeatedly.
Pattern 2 — Stock price boost after CB issuance → conversion → sell cycle
Timeline analysis:
T+0: CB issuance announcement
T+1~3 months: Strengthened IR activities, continuous announcement of positive news
T+3~6 months: Stock price rises 20~50%, individual buying force flows in
T+6 months: CB conversion begins
T+6~9 months: Market sale of conversion volume
T+9~12 months: Stock price plummets, confirmation of major shareholders’ shares decreasing
T+12~18 months: Management item or trading suspension
This cycle repeats.
Pattern 3 — Recycling of Executive Networks
Things to note:
Key executives of suspended companies reappear in new companies
- Executives of the corporation that appeared as the acquirer of CB were confirmed by other small listed companies.
- “New company” but the network of relationships is the same
This is the core characteristic of what Lee & Kim (SSRN) calls the “stock price manipulation network.”
The network does not disband. It just gets reorganized.
Pattern 4 — Timing of audit firm change
Analysis data:
Audit firm replacement rate two years before trading suspension: 3.2 times that of the control group
- In particular, the shift from Big 4 to small and medium-sized audit firms is concentrated.
- Disclosure of reason for replacement: Most cases are “cost reduction”
Real reason (supposed):
Notice of rejection of opinion by existing audit firm → Voluntary resignation or replacement
- Replace with a less demanding audit firm → Attempt to secure an appropriate opinion
Why is it important to know this pattern?
These patterns do not occur by chance in a single company.
It is repetitive and structured.
That means — captureable in advance.
RaymondsRisk detected 85.9% of the 276 trading suspension companies in advance.
This is because these patterns were monitored in real time.
key message
When you see a pattern, you also see the ending.
Relational risk is a tool to read the pattern.
■ Reference materials
Keum (2024): Demonstration of private CB red flags.
- Lee & Kim (SSRN): Stock price manipulation network structure
- Lim (KCMI): Above KOSDAQ small-cap price
- RaymondsRisk White Paper: https://www.konnect-ai.net/whitepaper
#relationalrisk #raymondsrisk #raymondsindex #konnectai
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