Prosecution raids Meritz Securities over loan brokerage suspicions involving undisclosed real estate PF information

FSS Uncovers Unfair Real Estate PF Cases at 5 Securities Firms

The prosecution has conducted a search and seizure related to allegations of loan brokerage that occurred during the process of acquiring real estate using real estate PF information by an executive of Meritz Securities.

The Tax Crime Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Park Hyun-gyu) is conducting a search and seizure at the Meritz Securities headquarters and the residence of executive Park on the 30th in connection with violations of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (including bribery).

According to the prosecution, Mr. B is suspected of requesting his subordinates to arrange loans to secure acquisition funds during the process of acquiring real estate using real estate PF information, and the subordinates, following that request, brokered loans with other financial institutions and exchanged compensation with Mr. B.

Earlier, on the 11th of this month, the Financial Supervisory Service announced that it had conducted a planned inspection of real estate PF at five securities firms and identified numerous cases of executives and employees pursuing personal gain and weaknesses in internal controls of the securities firms. Amid increased profits related to real estate PF, large performance bonuses were paid to some securities firm executives and employees, and cases of illegal and unfair practices exploiting superior positions by some securities firm executives and employees were confirmed.

As a result of the Financial Supervisory Service's inspection, cases were uncovered where non-public profitability and stability information of PF project sites were used to privately lend money to developers at interest rates exceeding legal limits, resulting in the embezzlement of interest amounting to approximately 4 billion KRW. Using job-related information, approximately 90 billion KRW worth of real estate was acquired, and the affiliated securities firm also undertook underwriting and arranging related to the buyer's financing (CB) during subsequent sales.