SEOUL, Dec.3 (Korea Bizwire) – The shock effect of black market deals with analysts and fund managers involved is hitting hard at securities firms in Yeouido. Numerous trade firms and asset management firms have been investigated by the prosecution, with documents and data seized and offices searched. The investigation has revealed even more names in memos and text messages, widening the scope of the scandal.
Around 10 companies are undergoing seize and search operations, and dozens of trade analysts and fund managers are under investigation for using classified information from Hanmi Pharmaceutical.
Executive Director Park of KB Investment and Securities, and Team Leader Kim of KDB Daewoo Securities have been arrested for corruption related to block deals (selling large quantities of stocks after hours).
The head of Alpine Route Advisors and a fund manager at Hangaram Advisors are also under arrest for receiving money and valuables.
Prosecution also seized and searched Hanwha Investment and Securities. A branch manager was accused of receiving shares worth hundreds of millions of won for mediating block deals.
Trade firms and operators that are under the microscope due to the misdeeds of their employees are busy distancing themselves from the scandals, saying ‘it is a personal scandal from an employee, not the whole company’.
Some are expressing discomfort about the prosecution’s investigation. One trading official commented that the investigation executed by the prosecutors seemed like a ‘show’. Gossip on ‘who would be the target today’ and ‘who got accused of what’ is continuously stirring in Yeouido.
Another trading official described the industry atmosphere as ‘exhausted’, as prosecutors are cracking down hard even though some who are under investigation have a high chance of being innocent.
However, some claim that internal inspection systems should be strengthened since the scandals prove that the self-control system employed by stock firms and operators is not functioning properly.
They point out that because of the characteristics of their profession, not only analysts and fund managers but also normal employees are exposed to temptation. As it is difficult to know when a black market deal actually takes place, industry watchers say that the only way to reduce corruption is to strengthen internal control systems within a company.
By M.H.Lee (email@example.com)