By Kang Shin-who
Staff Reporter
Prosecutors have indicted a former executive of U.S. investment bank Lehman Brothers on charges of providing funds for stock rigging in return for kickbacks. The Korean American, identified only by Song, 41, intentionally bought a large number of shares through a fund manager in exchange for 100 million won ($100,000) kickbacks from stock price manipulators, the Seoul Central District Prosecutors' Office said Sunday.
Song bought 250,000 shares of UC Icols, which is now de-listed from the Kosdaq market, for 5.5 billion won at the request of the manipulators. It is the first time a foreign director was indicted in Korea on charges of receiving bribes related to stock manipulation.
Boosted by the manipulation of stock prices, the company’s share price soared to as high as 27,000 won at one point from 2,450 won. After the stock riggers took illegal gains, the stock price plummeted for 13 trading days in its wake, wiping out 250 billion won in capital. UC Icols CEO, identified by Park, has already been sentenced to a prison term.
Prosecutors found that Song persistently asked a fund manager based at a Tokyo branch of Lehman Brothers to buy the stock, according to prosecutors. At the time when Leman bought the stock, the stock surged on the investment bank’s purchase. But Lehman also ended up recording 4.6 billion won in investment losses.
In addition, the prosecution found Song traded stocks of 47 companies worth 9.5 billion won by using accounts under borrowed names. An executive of a brokerage house is banned from directly buying and selling stocks.
Prosecutors said investigating further into the case to check whether Song had other accomplices.