South Korean prosecutors will launch an investigation into allegations of stock price manipulation by Korea Exchange Bank (KEB) and its major shareholder, the U.S.-based private equity fund Lone Star, the nation's financial watchdog said Wednesday.
The upcoming investigation is expected to deal another blow to Lone Star's US$7 billion sale of the Korean bank to Kookmin Bank, the nation's top lender, analysts say.
KEB and Lone Star have been under investigation since April by the Financial Supervisory Service over suspicions that they spread false rumors to buy a stake in the Korean bank's credit card unit at a below-market price.
However, the financial regulator didn't disclose details of its own inquiry into the allegations. Also, it wasn't immediately clear when the prosecutors will begin their investigation.
In May, Kookmin Bank reached an agreement to buy a stake of as much as 71 percent in KEB from Lone Star and other shareholders.
In the agreement, Lone Star had planned to sell its entire 50.5 percent stake in the bank.
Kookmin Bank missed the original deadline to pay for the deal on Sept. 16 since Lone Star is being investigated separately by prosecutors over alleged irregularities by the U.S. fund's purchase of KEB in 2003.
Seoul, Sept. 27 (Yonhap News)
Prosecutors to investigate KEB's alleged stock price manipulation |
