[Asia Economy Reporter Minji Lee] The Financial Supervisory Service (FSS) has reportedly begun a review of Samsung Securities in connection with allegations of illegal succession of management rights involving Samsung Electronics Vice Chairman Lee Jae-yong. Samsung Securities is mentioned dozens of times in the indictment against Vice Chairman Lee, prompting an investigation into whether the company engaged in illegal activities during the management succession process.
According to the financial investment industry on the 13th, the FSS recently obtained the indictment against Vice Chairman Lee and has started verifying whether administrative sanctions, including penalties against Samsung Securities, are necessary. Samsung Securities appears 48 times in the indictment and is suspected of being frequently involved in various illicit transactions.
In 2015, the prosecution indicted Vice Chairman Lee and other senior Samsung officials en masse, alleging that the merger between Samsung C&T and Cheil Industries was illegally conducted to strengthen Lee’s control over the group and facilitate management succession.
The prosecution believes that at the time of the merger, the stock price of Cheil Industries, where Lee was the largest shareholder, was artificially inflated, while Samsung C&T’s stock price was suppressed through various illegal means. During the stock purchase request period (July to August 2015) following the merger approval, it is suspected that Samsung Securities and others submitted price-manipulating orders such as “high-price buy orders” to manage Cheil Industries’ stock price. Despite acting as an advisor to Cheil Industries, Samsung Securities is also accused of engaging in conflicts of interest by encouraging or facilitating merger approval votes from minority shareholders of Samsung C&T, whose interests were opposed. Additionally, there are allegations that Samsung Securities shared customer information with Samsung C&T and approached Samsung C&T shareholders under the pretext of providing investment consultation to secure proxy voting rights.
Samsung’s side argues, “Securities firms routinely inform customers about major rights events related to their holdings, such as mergers and capital increases, as part of their regular operations. The merger between Samsung C&T and Cheil Industries was also a typical case of notifying relevant shareholders about events affecting their holdings.”
The FSS is reportedly of the view that further investigation into charges already prosecuted and under trial is unnecessary. However, it believes review is needed for parts not yet prosecuted by the prosecution or for additional matters that financial authorities should recognize and investigate.
Former Samsung Securities CEO Yoon Yong-am was investigated by the prosecution but was not indicted, and the company itself did not face criminal charges. Nonetheless, regardless of prosecution decisions, if Samsung Securities was involved in illegal activities at the time, sanctions against both the securities firm and its executives and employees at that time appear inevitable.
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