Value context and insight. lkm@koreatimes.co.kr
‘Korea Zinc complicit in SM Entertainment stock manipulation:’ MBK
The lobby of Korea Zinc in Seoul / Korea Times file
By Lee Kyung-min
Korea Zinc, Korea’s leading nonferrous metal manufacturer, had prior knowledge that one of its investment funds would be used to manipulate the stock price of K-pop powerhouse SM Entertainment, according to Youngpoong Group on Friday.
The fresh allegation comes amid a prolonged battle as Youngpoong and private equity fund MBK Partners vie with Korea Zinc for control over management of the zinc smelter.
Youngpoong claimed that the alleged manipulation highlights Korea Zinc’s lack of internal oversight and ethical standards.
Market watchers and legal experts say Korea Zinc could be held criminally liable for violating the law governing capital markets, under which collusion and aiding and abetting in stock manipulation are subject to prosecution.
Under the revised law governing the punishment of stock manipulation, penalties can be up to twice the total of illicitly gotten gains and the total of losses evaded.
The private equity fund said its claims are backed by internal emails among senior Korea Zinc executives, obtained through court proceedings.
According to Youngpoong and MBK, executives were aware as early as February of 2023 that their funds to finance Havana 1, an investment fund operated by private equity fund OneAsia Partners, would be mobilized to purchase a large number of SM Entertainment shares.
A Feb. 14 email sent to a Korea Zinc executive surnamed Park from the head of the firm’s finance division said, “OneAsia Partners is planning to establish a fund to buy shares in SM Entertainment.”
A day later, the Zinc smelter invested over 101.6 billion won ($730 million) in the Havana 1 fund, giving it a stake of over 99 percent.
Korea Zinc maintains the fund was only one of many products in its investment portfolio, adding that it was only a passive financial investor.