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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Jisun] The prosecution has launched a forced investigation into LS Securities (formerly Ebest Investment & Securities) and Hyundai Engineering over allegations that an LS Securities executive privately used insider information.
The 3rd Anti-Corruption Investigation Division of the Seoul Central District Prosecutors' Office, led by Chief Prosecutor Lee Seung-hak, announced on the 21st that it is conducting a search and seizure of more than 10 locations, including the headquarters of LS Securities and Hyundai Engineering, in connection with the executive, Mr. A, who is suspected of violating the Capital Markets Act.
Hyundai Engineering is identified as the contractor for the real estate development project where Mr. A allegedly misused information for personal gain.
According to the Financial Supervisory Service's (FSS) inspection of real estate project financing (PF), Mr. A is accused of gaining unfair profits of about 50 billion KRW (approx. 500 billion won) by using information obtained through his involvement in arranging stage-by-stage loans for the development project.
It is alleged that Mr. A, through a company he effectively controlled, acquired convertible bonds (CBs) issued by the largest shareholder of the project developer for several tens of millions of KRW and later sold them for approximately 50 billion KRW after securing a project management (PM) contract with a subcontractor.
Further investigation revealed that part of the 200 billion KRW project financing loan that Mr. A had arranged was lent to the subcontractor, which was used to purchase CBs from Mr. A’s company.
The FSS also referred Mr. A to the prosecution for further investigation, alleging that he personally lent 70 billion KRW at excessively high interest rates to the developer and received fees and interest amounting to approximately 4 billion KRW.
Three out of five private loans, amounting to around 60 billion KRW, were found to exceed the maximum legal interest rate cap (20% at the time).
The FSS believes Mr. A engaged in these personal financial dealings across four PF project sites, where he was either handling or brokering loans.
The prosecution is currently investigating the specific details based on the FSS's request for a criminal investigation.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
