A former executive director of Goldman Sachs and three others have been arrested for allegedly manipulating stock prices, prosecutors said Thursday. 

The 49-year-old Korean-American, surnamed Kim, is suspected of helping brokers, including a 54-year-old surnamed Choi, find institutional investors to buy manipulated stocks in 2011, the prosecutors at the Southern District Prosecutors' Office said.

Choi and his accomplices allegedly received 600 million won ($500,000) to find investors.

Prosecutors allege the money came from three people who were arrested in May on suspicion of manipulating stock prices for local conveyor belt manufacturer Dongyang P&F from 10,000 won per share to 14,800 won.

Prosecutors suspect these people also gave 100 million won to Kim in exchange for helping them find other investors.

Investors from ING Life and Macquarie Investment Management Korea Co., then bought the Dongyang P&F stocks, according to the prosecutors.

Earlier this month, prosecutors raided the local headquarters of Goldman Sachs in central Seoul, as well as the two other investment companies.

"The company is not involved in the incident," a representative for Goldman Sachs said, underlining that Kim acted independently.

Prosecutors said they are expanding the investigation to find out if some of the money flowed to other institutional investors. (Yonhap)