SEOUL, Feb. 26 (Korea Bizwire) – U.S. hedge fund Elliott Associates denied allegations Friday over a possible breach of local disclosure rules regarding Samsung C&T Corp., stressing a series of processes for its Samsung stake purchase were “perfectly legal.”
Elliott made the claim ahead of a prosecution probe on suspicions that it illegally “parked” its shares in the South Korean conglomerate’s fashion and trading arm in the investment banks before disclosing them in order to prevent its merger with Cheil Industry.
Making a clear objection to the deal, the U.S. entity last year said that it had bought an additional 2.17 percent stake on top of its 4.95 percent in Samsung C&T to own more than a 5 percent stake.
The new shares, however, were found to have already been held by foreign brokerage houses under a total return swap (TRS) arrangement with Elliott, leading South Korea’s financial authorities to conclude Elliott bypassed the local disclosure rule and made the illegal parking deal, where a stock owner keeps his or her security holdings in others’ accounts in order to hide real ownership.
“Elliott’s swap deal was made in accordance with regular terms of transactions and general transaction practices,” it said in a release, noting that such a contract “is widely used in local and global markets.”
“We immediately carried out the duty of disclosing the stock ownership though we had five days before the deadline, which clearly indicates that we had no intention to violate the regulation,” it stressed.
Pointing out that the South Korean financial authorities’ decision to bring the case to the prosecution does not mean that Elliott was found to have committed any illegal acts, the U.S. vowed to fully cooperate with the investigation.
After wrapping up its bumpy merger process after the tough battle with Elliott, Samsung C&T was reborn as a new entity in September 2015. The merger is part of the group’s efforts to streamline its structure through big shakeups of its affiliates.