Lone Star Guilty Of Market Manipulation In Korea

Oct 7 2011 | 11:52am ET

A Korean court has rapped private equity firm Lone Star Funds for manipulating the stock price of a bank in which it owns a controlling stake.

The Seoul court fined a Lone Star unit US$21 million and sentenced the former head of its South Korean office, Paul Yoo, to three years in prison. On the bright side, the ruling appears to clear the way for Lone Star to sell its stake in Korea Exchange Bank to Hana Financial Group for US$4.1 billion.

That deal had been held up by the court proceedings, and even if it were not in place, would likely be required by the court, which will probably disqualify Lone Star as KEB's largest shareholder, forcing it to reduce its stake to 10%.

KEB itself was acquitted in the retrial, which was triggered by allegations that Yoo spread falsehoods about a possible capital reduction at KEB's credit card unit in 2003.


In Depth

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...