Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Kiwoom chief's resignation casts ripple effect on other major shareholders
Daou Kiwoom Group's former Chairman Kim Ik-rae makes a public apology over his alleged involvement in a recent stock scandal, at its headquarters in Seoul, Thursday. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Deteriorating public sentiment toward Kiwoom Securities is showing no signs of letting up, even after its former Chairman Kim Ik-rae resigned for his alleged involvement in a nationwide stock manipulation scandal.
Kim made the abrupt announcement Thursday afternoon and decided to donate all of his gains worth 60.5 billion won following his suspicious sell-off of 1.4 million Daou Data shares. Daou Data is an affiliate of Daou Kiwoom Group. The firm's stock price fell sharply shortly after Kim sold his shares.
He claimed no responsibility for the latest scandal ― an abrupt stock fall of eight listed shares, including Daou Data ― but appeared to display such gestures to prevent further losses to other Kiwoom affiliates.
Given the lingering criticism over the allegations, the group's tainted corporate image is unlikely to recover in the near future even after the donation.
Even before the scandal, Kim, 73, was ready to retire after ceding management control to his children who received stakes in key Kiwoom affiliates and realigning the group's management structure. This rekindled suspicions that the latest decision by the former chairman was nothing more than an insincere show of apology ahead of his planned retirement.
Now, the target of criticism is being directed at Seoul City Gas Chairman Kim Young-min, who was also involved in a similar stock sell-off. He sold 100,000 Seoul City Gas shares at 456,950 won per stock in a suspicious block deal on April 17, a week before the shocking collapse of its stock price. The company's share price went on a surprising losing streak for four consecutive trading days from April 24, leaving a number of retail investors with huge losses. Seoul City Gas shares were traded at around 104,000 won as of Friday.
Of particular note was that the mass sales were made for the first time in more than 13 years. Kim's stock ownership ratio reached 9.54 percent, down 2 percentage points, following the suspicious stock trade.
It remains to be seen whether the Seoul City Gas chief will also take responsibility, as per the overnight decision by the former Kiwoom leader.
But considering the scale of the losses following the latest scandal, he will also have a tough time evading criticism for the stock sale, considering the financial impact of such moves on the market.
“The latest scandal should be a wake-up call for other major shareholder of any firm,” Kim Dae-jong, a professor of business administration at Sejong University, said. “They should be reminded of their social role and their influence in the financial market.”