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There aren’t many prison inmates whose families gain billions during their incarceration—but for electric vehicle manufacturing founder Lee Dong-chae, that’s certainly the case.
The South Korean billionaire—who launched battery material producer Ecopro in 1998—is currently serving a two-year sentence accused of violating the country’s capital market act.
According to local media, Lee allegedly gained illegal profits worth 1.1 billion won ($822,922 USD) by purchasing stocks on a borrowed-name account.
Lee has battled the charges: He has appealed the rulings from South Korea’s Supreme Court over the insider trading claims, which are alleged to have happened between 2020 and 2021 according to Korean reports, but was sent to prison in August.
But despite shares in Ecopro taking an initial wobble following Lee’s arrest, they have rebounded with vigor.
In fact, the company is faring so well it has seen its shares leap by as much as 1,044% in this year alone.
At the start of the year Ecopro’s listing on the Kosdaq—an electronic trading platform similar to the U.S.’s Nasdaq—was at 110,000 Korean won ($82).
According to Bloomberg’s Kosdaq monitor on Aug. 24, this hit 1,259,000 won ($942).
For the business’s former chairman and CEO Lee—who directly owns an 18.84% stake in the company but indirectly controls up to 25% of the company’s shares—this has meant a gain in wealth worth $4.5 billion—according to Bloomberg’s Billionaire’s index.
Previously Bloomberg had estimated Lee’s wealth was around $500 million after taking a massive hit when he was fined 2.2 billion won ($1.6 million) for his alleged misdemeanors. But now it sits at $4.9 billion.
Ecopro did not immediately respond to Fortune‘s request for comment.
However, a spokesperson for the company told Bloomberg that the business was suffering without Lee at the helm, saying the business is in “desperate need” of Lee’s “forward-looking insight and spirit to challenge.”
The spokesperson for the brand also highlighted to Bloomberg that Lee and his family members own the minimum quantity of shares in the business needed to maintain control of the business.
Why the gain?
Ecopro’s success has been a melting pot of factors: timing, retail investors, and a new focus on compliance.
For a start, the EV market has enjoyed a rally this year: Tesla stocks are up 133% in the year so far, while competitor Rivian is up 34% for the same period.
This summer smaller companies have also witnessed blistering rallies. In July JPMorgan’s retail flows tracker showed Nikola was the fifth most traded U.S. stock between retail investors, while Ohio-based Lordstown also saw a brief uptick in mid-June of around 30%.
Retail investors, buoyed by a continued focus on EV introduction into the mainstream, have similarly piled into Ecopro as a key component maker for such vehicles.
However, Ecopro’s share price may have become inflated as retail investors continue to jump on the bandwagon. Park Ju-gun, head of corporate research firm Leaders Index, which is based in Seoul, told Bloomberg that Ecopro stock may have become overheated as a result.
The business—which was launched by 63-year-old Lee after a stint as an accountant and failed fur entrepreneur—has also doubled down on compliance since the news of its chairman’s arrest.
Earlier this year Ecopro and its subsidiaries joined the South Korean Fair Trade Commission, which will subject it to tighter regulation and scrutiny.
Likewise, a spokesperson told Bloomberg the company has introduced a practice of reporting stock transactions by senior employees and executives, as well as setting up a monitoring system for insider trades.
