Debate Over Violation
“Our total return swap (TRS) contract was lawful and we will cooperate with the prosecution for an investigation into us,” said Elliot Management which was reported to the prosecution by the Securities and Futures Commission under the Financial Services Commission.
“The contract was perfect and lawful,” said the US-based hedge fund in a press release titled “Our Position regarding a decision by the Securities and Futures Commission under the Financial Services Commission.”
“This deal was done with independent financial institutions with no interests with Elliot Management in accordance with standard contract and international trade practices,” Elliot stressed in the press release.
They said that they implemented the Five Percent Rule according to their legal advisors. “We had no attention to violate the relevant statute as we immediately disclosed it without waiting for five days as allowed in law and regulations.
Earlier, the Securities and Futures Commission under the Financial Services Commission resolved a punishment plan against Elliot Management which made rare swap deals with foreign investment banks in a process to buy in stocks of Samsung C&T before its merger with Cheil Industries in the fourth regular meeting on February 24. Financial regulators informed the prosecution of charges against Elliot Management and turned in related materials to the prosecution.
The commission judged that Elliot Management violated the Five-Percent Rule as they secretly increased its equities in Samsung C&T while making bad use of TRSs in a process to buy in stocks of Samsung C&T.