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Prosecutor’s Office Launches Investigation on Allegedly Illegal Loan to SK Group Chairman
Korea Investment & Securities Under Probe
Prosecutor’s Office Launches Investigation on Allegedly Illegal Loan to SK Group Chairman
  • By Michael Herh
  • June 3, 2019, 11:27
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The prosecution has launched an investigation into the allegations that Korea Investment & Securities illegally extended 167 billion won to SK Group chairman Chey Tae-won.

The prosecution has initiated an investigation on allegations that Korea Investment & Securities illegally loaned 167 billion won to SK Group chairman Chey Tae-won. The Financial Consumer Agency recently charged Korea Investment & Securities and its president Jung Il-moon and vice chairman Yoo Sang-ho with fraud and violation of the Capital Markets Act.

Korea Investment & Securities raised 167.3 billion won by issuing promissory notes in August 2017 and spent the money to buy the short-term bond of KIS IB 16th, a special-purpose company (SPC). Then, KIS IB 16th acquired 19.4 percent of SK Siltron. The SPC was in a total return swap contract with SK Group chairman Chey regarding SK Siltron shares so that the chairman can have SK Siltron shares without any equity capital by being responsible for profits and losses attributable to stock price changes.

The Financial Consumer Agency determined that the total return swap contract constituted extension of credit to an individual in violation of the Capital Markets Act.

In the meantime, the Securities and Futures Commission under the Financial Services Commission decided on May 22 to charge a fine of 50 million won on Korea Investment & Securities with regard to the loan, adding that the loan constituted an extension in violation of the act.