FTC to fine 15 firms $1.2 bil. for rigging gov't bond bids
Summary
The Fair Trade Commission said Wednesday it decided to fine 15 financial companies 1.62 trillion won for colluding in government bond auctions from January 2020 to June 2023. The firms exchanged bidding information in 150 auctions, and the watchdog said they agreed on specific yields or volumes in 145. The FTC said the conduct artificially raised auction yields and marked its largest single-case fine. It also decided to refer seven companies to the Serious Crime Investigation Agency.
Key Facts
- The 15 primary dealers comprised 10 brokerage houses and five banks.
- The FTC said dealers exchanged information on bidding yields and volumes through phone calls and messaging apps.
- KB Securities received the largest fine, 332.1 billion won, followed by NH Investment & Securities with 242.7 billion won.
- The previous record for a single FTC case was a 1.03 trillion won fine imposed on Qualcomm in 2016.
- The seven companies referred to the Serious Crime Investigation Agency were Mirae Asset Securities, NH Investment & Securities, Industrial Bank of Korea, KB Securities, Kiwoom Securities, Korea Development Bank and Korea Investment & Securities.
The logo of the Fair Trade Commission / Korea Times file
Korea's fair trade watchdog said Wednesday it has decided to impose 1.62 trillion won ($1.2 billion) in fines on 15 financial companies for colluding in government bond auctions for more than three years.
The Fair Trade Commission (FTC) said the firms, all primary dealers comprising 10 brokerage houses and five banks, exchanged information on bidding yields and volumes through phone calls and messaging apps regarding 150 auctions between January 2020 and June 2023.
It marked the largest fine ever imposed by the FTC in a single case, surpassing the previous record of 1.03 trillion won levied on Qualcomm for unfair practices in 2016.
In 145 of those auctions, the companies went beyond exchanging information to reach agreements on specific bidding yields or volumes, constituting bid rigging, the watchdog said.
"Dealers in charge of bidding at the 15 companies exchanged information on bidding volumes or yields on auction days, routinely engaging in collusion, with agreements sometimes reached within seconds," the FTC said.
The watchdog noted such collusion constitutes a serious violation as government bonds serve as a benchmark for pricing other financial products and determining interest rates.
"Establishing appropriate prices in the government bond issuance market plays a key role in supporting the efficiency of the overall financial market, as well as government finances," the FTC said.
The FTC said dealers passed on contact details of their counterparts at rival companies to their successors during handovers to ensure continued information exchanges, even documenting the practice in manuals.
The FTC said such practices artificially raised yields at government bond auctions by restricting competition.
"The FTC will continue to strictly enforce the law without exception against any collusion that undermines market competition, especially in the public sector, where it wastes state funds and places a burden on the public," the watchdog added.
KB Securities received the highest fine of 332.1 billion won, followed by NH Investment & Securities with 242.7 billion won.
The FTC said it has decided to refer seven companies -- Mirae Asset Securities, NH Investment & Securities, Industrial Bank of Korea, KB Securities, Kiwoom Securities, the Korea Development Bank and Korea Investment & Securities — to the Serious Crime Investigation Agency.
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