Rogue Trade Fouls Woori
By Cho Jin-seo
Staff Reporter
Woori Investment & Securities has launched an internal investigation into one of its senior traders, after the U.S. Commodity Futures Trading Commission (CFTC) charged him with illicit futures trading.
The firm said Song Kuen-cheol, director at Woori Absolute Partners, was relieved from duty when the CFTC informed the firm of his alleged illegal trades, which earned him more than $348,000.
The incident deals a heavy blow to the reputation of the stock trading company, as it is trying to expand its global operation through its subsidiary. Based in Singapore, Woori Absolute Partners is the firm’s first hedge fund operation. Song is one of its founding members.
``We have launched an audit into his accounts since earlier this month, and we may forfeit his assets, if illegal activities are found,’’ an official of the firm’s public relations department said Thursday.
According to the firm, Song made illicit profits for himself by exploiting the investment decisions he made. ``He bought futures products with his personal account, and sold them to the firm’s account at higher prices,’’ the spokesman said.
Woori didn’t know about the activities until the CFTC spotted them, he added. ``It is practically impossible to monitor traders and their personal accounts, without help from the exchange or the financial authorities.’’
Woori opened the $100-million hedge fund operation in Singapore in May 2008, with Song taking charge of the management of bond and other non-equity assets. He majored in international economics at Seoul National University and worked as a bond trader at Hanwha Securities, JP Morgan and Deutsche Bank before joining Woori.
The Absolute Fund was a symbol of Woori’s ambition of becoming a global investment company. Its office is in the OUB Centre, which is one of the tallest buildings in Singapore, where many large global financial firms are also located.
In a press interview in 2008, Song said that the firm named the fund Absolute because ``the fund pursues an absolute return on investment.’’ The fund was initiated with $35 million in non-equity assets, and $60 million in equities.
The CFTC said on Monday, local time, that it has frozen Song’s assets. A court hearing on the case is scheduled for Monday.
``The CFTC complaint alleges that, since at least August 28, 2009, Song engaged in a series of unlawful commodity futures transactions involving Natural Gas and Heating Oil futures contracts on the New York Mercantile Exchange,’’ the commission said in a press release. ``Through this allegedly unlawful scheme, Song repeatedly made non-competitive, fictitious trades between his personal account and the hedge fund account of his employer.’’
The commission also said Song is a Singaporean citizen. Woori says he is currently in Singapore, but didn’t confirm whether he holds Korean citizenship as well.