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Prosecutors have slapped the U.K. investment fund Hermes Investment Management with a huge fine for manipulating local stock prices, the first criminal punishment of an overseas fund management firm here. Seoul Central District Prosecutors Office said it fined Hermes W7.3 billion (US$7.4 million) on charges of pocketing massive profits by manipulating the share price of Samsung Corp., the trading arm of the Samsung Group, in late 2004. Prosecutors also obtained an arrest warrant for HermesĄŻ former head of emerging market management Robert Clement, who undertook the manipulation.
The British fund initially bought 7.772 million shares or 5 percent of the total in Samsung Corp. in March 2003. It sold off its entire stake just two days after Clement in an interview hinted at a hostile foreign takeover bid for the company, which sent shares of Samsung Corp. skyrocketing. Prosecutors decided this constituted deception under the securities law.
They concluded that Clement acted on his own but Hermes is liable under the relevant regulations. Clement, who was fired over the scandal, has fled to Israel. The company on Tuesday said it could not accept the punishment, which makes it highly likely that the matter will go to trial. Hermes altogether holds some W91.2 trillion in funds including postal workersĄŻ pensions in the UK and has a reported W498.2 billion invested in the Korean market.
(englishnews@chosun.com )
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