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Ex-Lehman Bros. exec arrested for huge stock manipulation
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May 06, 2008
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A former senior executive at the Korean unit of Lehman Brothers Holdings Inc., a U.S. investment banking firm, was arrested for conspiring last year in one of the biggest stock price manipulations in Korea. Seoul prosecutors said they are investigating whether other employees at the firm’s Seoul office took part in the scheme.
Seoul Prosecutors Office said yesterday it had arrested a 41-year-old former executive director at Lehman Brothers’ Seoul office, an ethnic Korean with U.S. citizenship identified only by the surname Song, on charges of stock manipulation. Song is the first person to have been an executive at a major foreign investment bank operating here to be arrested on stock manipulation charges.
In 2006 executives of Kosdaq-listed UC Industry Community Online Services Inc. embezzled about 41 billion won ($40.6 million) from the firm, using the money to buy back shares and falsely boost the share price.
The UC Icols share price rose about 1,075 percent to 28,800 won between Nov. 2006 and June 2007, helping the firm’s former executives pocket more than 35 billion won. The stock price later plummeted as shareholders grew suspicious. Five people who took part in the scheme were arrested last year.
According to prosecutors, Song bought 250,000 UC Icols shares for 5.5 billion won in exchange for a 100 million won cash bribe and other kickbacks in 2007. When the stock price plunged later that year, Lehman Brothers faced losses of more than 4.6 billion won.hawon@joongang.co.kr |
