The Seoul High Court’s Thursday ruling that the ex-head of Lone Star Korea was guilty of manipulating stock prices cleared legal issues on the fund’s deal to sell its Korea Exchange Bank to Hana Financial Group.

But uncertainty still lingers in the financial market as the U.S. buyout fund has yet to speak up about its future course of action and who it wants to sell its $4.1 billion stake to.

Hana’s earlier proposal to take over 51 percent stake in KEB now depends on how Lone Star, the largest shareholder of KEB, responds to the court’s guilty ruling, market analysts said.

“I understand that Lone Star wants to push for a quick sale of its KEB stake, but they haven’t made an official stance on how they want to do it,” a senior official at Hana said.

The court ruled that the ex-head of the Korean unit of Lone Star is guilty of manipulating stock prices of a KEB card unit by spreading false rumors in 2003. The guilty verdict has made Lone Star unfit to hold the largest shareholder post of the KEB.

The nation’s top regulator Financial Services Commission said Thursday it may therefore order Lone Star to dispose of its controlling stake in KEB.

“We will announce a final decision on how to handle these shares upon consulting relevant legal principles and discussing with FSC committee members,” said the FSC on Thursday.

It is entirely up to Lone Star whether they want to finalize the proposed with Hana or find a third party to offload its assets. The KEB-Hana deal also faces stern opposition from the KEB labor union, which has been protesting against the deal for about 10 months until late July.

Lone Star in 2003 acquired a controlling stake in KEB for $1.2 billion. Its efforts to dispose the stake failed twice, with Kookmin Bank and HSBC, due to regulatory delays. Seoul’s high court Thursday slapped a fine of 25 billion won on LSF-KEB Holdings SCA, Lone Star’s Belgium-based unit, owner of KEB. Paul Yoo, the former head of KEB, was sentenced to three years in prison.

By Cynthia J. Kim (cynthiak@heraldcorp.com)