SEOUL, Oct. 13 (Yonhap) -- Lone Star Funds' decision not to appeal a Seoul court verdict is expected to speed up the U.S. buyout fund's long-stalled plan to sell its controlling stake in Korea Exchange Bank (KEB), clearing legal uncertainties that have blocked the sale, market watchers said Thursday.

Lone Star, which owns a 51.02 percent stake in No. 5 lender KEB, has decided not to appeal a court ruling that found the U.S. private equity firm guilty of stock manipulation charges, sources said.

Last week, the Seoul High Court found the U.S. buyout firm and its former South Korean unit chief Paul Yoo guilty of manipulating stock prices and imposed fines of 25 billion won (US$22 million) and 4.3 billion won, respectively. Both parties were given a one-week deadline to appeal  the verdict.

The decision is expected to expedite a 4.41 trillion won deal between Lone Star and Hana Financial Group Inc., the country's fourth-largest banking group, that has been in legal limbo since the Financial Services Commission (FSC), the country's financial regulator, indefinitely delayed approval, citing the lawsuit over Lone Star's stock manipulation charges in its 2003 purchase of a KEB credit card unit.

Following last week's court ruling, the FSC said it may order Lone Star to sell the bulk of its KEB stake if it fails to meet legal requirements as the lender's major shareholder.

"If Lone Star fails to meet the requirements, it will be ordered to sell the stake that exceeds its holding limit," the FSC said in an e-mailed statement, without clarifying the method and timing of any possible stock sale.

Korean law bans an executive or corporate entity from being the primary shareholder of a local bank if convicted of a crime during the last five years. As Lone Star's decision not to appeal the conviction strips the U.S. fund of eligibility to be a major shareholder, market watchers said the financial regulator is set to order Lone Star to sell a 41.02 percent stake in KEB.

According to the law, Lone Star, now convicted, is eligible to own no more than a 10 percent stake in KEB.

"If Lone Star gives up on lodging an appeal, the legal uncertainties will be completely repelled. There is no reason for the government to take further time," an FSC official said, adding the government will soon announce its decision after going through a legal review.