Financial regulators have widened the scope of their inquiry into the debt-saddled Tong Yang Group, not ruling out the possibility that six financial units of the conglomerate were misused as an illegitimate funding source to nonfinancial affiliates.

The group’s financial units are Tong Yang Securities, Tong Yang Investment, Tong Yang Asset Management, Tong Yang Financial Services, Tong Yang Life Insurance and TY Money Financial Services.

The expanded probe of the Financial Supervisory Service comes after market insiders and thousands of investors raised the suspicion that Tong Yang Securities were implicated in irregular sale of commercial paper and corporate bonds issued by its nonfinancial affiliates suffering cash flow problems.

“Aside from the allegation, we are considering looking into whether the financial units engaged in behind-the-scenes intra-group trading,” said an official at the FSS.

He hinted that a key investigation target would be whether the six Tong Yang financial firms breached the supervisory rules banning manufacturing conglomerates from exploiting their financial subsidiaries as a cash cow.

While financial authorities plan to focus on asset soundness of the six units, there is a feasibility that the antitrust regulator Fair Trade Commission or the prosecution will joint the probe in a bid to check appropriateness of the shareholding structure between Tong Yang’s financial and nonfinancial businesses, according to market insiders.

A consumer advocate spokesman cited that the Tong Yang Group chairman held an 80 percent stake in TY Money Financial Services, one of the two loan shark units of the group.

Tong Yang Financial Services is the other private moneylending subsidiary of Tong Yang Securities.

Though the group sold a 46.5 percent stake in Tong Yang Life Insurance to a local equity fund, the insurance unit is still classified as a Tong Yang affiliate under the nation’s antitrust rules.

More and more market observers predict that some of the six firms could eventually be put up for auction. They say that their asset soundness might have worsened like their manufacturing affiliates.

Earlier this week, the embattled group’s five nonfinancial units, including the holding firm Tong Yang Inc. filed for court receivership, as part of chairman Hyun’s alleged effort to block default from maturing bills worth some 1 trillion won ($909 million).

According to data compiled by the FSS, about 46,000 retail investors are assumed to have suffered collective losses of an estimated 2.3 trillion won.

By Kim Yon-se (kys@heraldcorp.com)