The Financial Supervisory Service decided to hand over Tong Yang Group chairman Hyun Jae-hyun and its former brokerage unit chief Jeong Jin-seok to the prosecution on charges of financial fraud, officials said Tuesday.

The financial watchdog said that it has transferred its investigative data on chairman Hyun and ex-CEO Jeong to the Seoul District Prosecutors’ Office.

The data is said to concern Jeong’s alleged pressure on Tong Yang Securities employees to promote aggressive sales of commercial papers and corporate bonds of debt-laden Tong Yang affiliates, only to suspend operations and file for court receivership.

“Pushing for CP sales despite the apparent improbability of returns can be seen as fraud,” an FSS official said.

Hyun, the group chairman, also faced a prosecutorial probe into allegations that Jeong could not have pushed for the fraudulent sales without the chairman’s approval.

The FSS also concluded that Jeong illegally leaked information on Tong Yang’s brokerage plans, such as its aim to secure additional loans from the Korea Development Bank and financial support from Orion Group, and to achieve successful liquidation of the Tong Yang Group stakes.

This is the third time that the FSS turned Tong Yang-related cases over to the prosecutors. The watchdog filed for a prosecution request twice in October, once over the illegal loans that Tong Yang Financial Services offered the embattled Tong Yang affiliates, and once over the embezzlement of Tong Yang Securities for unauthorized purchase of real estate property.

By Chung Joo-won (joowonc@heraldcorp.com)