Amid suspicions of unfair trading practices such as large-scale accumulation during the tender offer period for SM Entertainment (SM) shares, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), emphasized a zero-tolerance approach.
Lee Bok-hyun, Governor of the Financial Supervisory Service, is delivering opening remarks at the 'FSS Governor-Securities Company CEO Meeting' held on the 2nd at the Korea Financial Investment Association in Yeouido, Seoul. Photo by Dongju Yoon doso7@
On the 2nd, after a meeting with CEOs of securities firms held at the Korea Financial Investment Association, Governor Lee told reporters, "Regarding the merger and acquisition (M&A) situation of a specific entertainment company, since there is a counterparty involved, the FSS has tried to maintain a balanced view on several issues such as compliance with procedures, market disruption, or concerns about consumer harm," adding, "If any illegal elements are confirmed within a particular force or group, we will use the maximum authority allowed by law and regulations to hold them accountable."
Governor Lee explained, "Recently, as the procedures with fixed deadlines were abruptly concluding, suspicions of unfair trading have been raised, making it a practical issue that requires careful examination."
He continued, "The basic stance is that healthy competition within the rules, regulations, and systems in the capital market should be left entirely to market freedom, but if means or methods that may involve illegal elements are employed, it will be an intolerable situation in light of the zero-tolerance principle on unfair trading that we have publicly announced."
Earlier, HYBE requested the FSS to investigate violations of the Capital Markets Act, stating, "On the 16th of last month, an abnormal purchase amounting to 2.9% of the total issued shares of SM (683,398 shares) occurred at the IBK Investment & Securities Pangyo branch." HYBE also claimed that the transaction took place as SM's tender offer price of 120,000 KRW surged to 130,000 KRW, strongly suspecting that "it was carried out with the intent to manipulate the market price and obstruct HYBE's tender offer."
In response, the FSS announced the day before that it would promptly launch an investigation into the large-scale accumulation of SM shares during the tender offer period and respond strictly. The FSS stated, "If anyone artificially maintained the stock price above the tender offer price during the tender offer process, it could be punished as market manipulation under the Capital Markets Act."
On the same day, Governor Lee also explained improvements regarding deposit interest rates and credit loan interest rates. He said, "While some issues can be resolved through fostering a competitive environment, there are also practices that have become entrenched, so we discussed whether there is room for improvement or not."
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