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Brokerages fined for bond rate fixing
FTC levies W19.2b fine, refers six to prosecution
By Korea HeraldPublished : Nov. 4, 2012 - 20:25
A total of 20 local brokerages were slapped with a combined fine of 19.2 billion won for fixing the bond yield rates they submitted to the Korea Exchange for repurchasing the bonds put up for sale by the public.
Six of the brokerages were referred to the prosecution for further investigation and penalties as they traded the largest volume and were in on the rate fixing scheme from the very beginning, the Fair Trade Commission said on Sunday.
The companies also were subject to corrective action and ordered to disclose information about their legal violations.
The 20 brokerages are Kyobo, Daishin, Daewoo, Tongyang, Meritz, Mirae Asset, Bookook, Samsung, Shinyoung, Shinhan, I’M, SK, NH, Woori, Eugene, Yuhwa, Hana Daetoo, Korea, Hanwha and Hyundai.
Samsung was subject to the largest fine of 2.1 billion won, followed by Woori with 2 billion won and Daewoo with 1.8 billion won.
The six referred to the prosecution were Daewoo, Tongyang, Samsung, Woori, Korea and Hyundai, the commission said.
The public, whenever they purchase homes or cars, are obligated to buy bonds, which they immediately resell to banks. The yield rate applied for this sale is decided by 22 brokerages, which submit preferred rates for the following day’s bond trade.
For profit, the brokerages then purchase the bonds from the banks to resell them to another third party. Consequently, it made sense for them to peg the yield rates to their advantage, which is just what they did.
The brokerages first began to fix the rates in 2004, with the practice being continued up until December of 2010.
The employees of these brokerages discussed and fixed the yield rates via online messenger systems.
The brokerages even demanded other brokerages to submit hardcopies of the rate they planned to set for the following day to prevent any of them from going their own way.
“Hopefully, our recent crackdown will ease the financial burden on the public when they purchase bonds,” the Fair Trade Commission said. It added that it will continue to monitor illegal activities found to have a direct impact on public welfare.
The brokerage sector, however, voiced concerns over the fines, calling them excessive. Some of the brokerage employees, speaking on the condition of anonymity, also pointed out that the fixing had ended a number of years earlier, protesting against what they called “untimely” penalties.
By Kim Ji-hyun (jemmie@heraldcorp.com)
Six of the brokerages were referred to the prosecution for further investigation and penalties as they traded the largest volume and were in on the rate fixing scheme from the very beginning, the Fair Trade Commission said on Sunday.
The companies also were subject to corrective action and ordered to disclose information about their legal violations.
The 20 brokerages are Kyobo, Daishin, Daewoo, Tongyang, Meritz, Mirae Asset, Bookook, Samsung, Shinyoung, Shinhan, I’M, SK, NH, Woori, Eugene, Yuhwa, Hana Daetoo, Korea, Hanwha and Hyundai.
Samsung was subject to the largest fine of 2.1 billion won, followed by Woori with 2 billion won and Daewoo with 1.8 billion won.
The six referred to the prosecution were Daewoo, Tongyang, Samsung, Woori, Korea and Hyundai, the commission said.
The public, whenever they purchase homes or cars, are obligated to buy bonds, which they immediately resell to banks. The yield rate applied for this sale is decided by 22 brokerages, which submit preferred rates for the following day’s bond trade.
For profit, the brokerages then purchase the bonds from the banks to resell them to another third party. Consequently, it made sense for them to peg the yield rates to their advantage, which is just what they did.
The brokerages first began to fix the rates in 2004, with the practice being continued up until December of 2010.
The employees of these brokerages discussed and fixed the yield rates via online messenger systems.
The brokerages even demanded other brokerages to submit hardcopies of the rate they planned to set for the following day to prevent any of them from going their own way.
“Hopefully, our recent crackdown will ease the financial burden on the public when they purchase bonds,” the Fair Trade Commission said. It added that it will continue to monitor illegal activities found to have a direct impact on public welfare.
The brokerage sector, however, voiced concerns over the fines, calling them excessive. Some of the brokerage employees, speaking on the condition of anonymity, also pointed out that the fixing had ended a number of years earlier, protesting against what they called “untimely” penalties.
By Kim Ji-hyun (jemmie@heraldcorp.com)
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Articles by Korea Herald
