SEOUL, Dec. 15 (Korea Bizwire) – South Korea’s corporate watchdog is looking into whether Mirae Asset Group, a major financial service provider, is violating regulations over inside transactions among its affiliates, industry sources said Friday.
The current law forbids inter-affiliate trading within a business group where the controlling family holds more than 30 percent of the shares in an affiliate. Such trading is blamed for allowing owner families to easily net large profits by having subsidiaries award lucrative contracts to each other, undermining the principle of fair competition.
The probe launched by the Fair Trade Commission (FTC) caused the country’s finance regulator, to suspend its own review of corporate lending practices at Mirae Asset Daewoo Securities Co., the brokerage arm of the group.
In November, Mirae Asset’s securities firm, along with four other rivals, was granted a license to engage in investment banking businesses, but only Korea Investment & Securities Co. was given approval to do short-term corporate lending. Such lending includes the issuance of commercial papers, a key business for an investment bank.
Mirae Asset Group, meanwhile, has come under fire for its irregular ownership structure, which also led to unfair inside transactions among affiliates.
Meanwhile, Mirae Asset Daewoo Securities Co. said in a regulatory filing that it would sell 131 million new shares to raise 700 billion won (US$642 million) in fresh funds.
The stock offering is part of its efforts to boost its capital base to over 8 trillion won.
As of the end of September, its paid-in capital reached 7.33 trillion won, compared with 6.67 trillion won at the end of last year.
The brokerage unit aims to boost its paid-in capital to over 10 trillion won by 2020.