Korean financial authorities have tentatively agreed to ask local prosecutors to investigate U.S. hedge fund Elliott Associates over a suspected breach of disclosure rules regarding Samsung C&T.

Officials at the Financial Services Commission, the country’s financial watchdog, said a final vote on whether to report the case to the prosecution will be made later this month at a regular meeting.


In June of 2015, Elliott disclosed that it had taken an additional stake in Samsung C&T to hold more than a 5 percent stake in the firm. It also revealed that with the increased shares, it planned to block a merger between Samsung C&T and Cheil Industries.

The new shares, however, were found to have been in possession of foreign brokerage houses such as Merrill Lynch under a total return swap arrangement with Elliott before June. FSC officials perceived the move as an attempt to illegally “park” the shares before an official disclosure.

Traders are also obliged to issue a public disclosure within five days of acquiring a stake of more than 5 percent in a listed company, but the FSC concluded this month that Elliott violated this rule as well by holding the shares via the brokerages before it made an official disclosure in June.

(khnews@heraldcorp.com)