Regulators ask prosecutors to probe insurer over alleged stock rigging


Green Non-Life Insurance, which has been accused of stock manipulation, faces the possibility of business suspension or delisting from the stock market.

Though the insurance firm has been mapping out a plan for management normalization, financial regulators filed a complaint against the firm and its chairman with the prosecution for allegedly rigging stocks.

The regulatory sanction could make it impossible for the company to increase capital and gain approval from regulators for the management normalization plan.

An official of the Financial Supervisory Service raised the possibility that regulators will not endorse the company’s plan.

The firm’s capability for insurance payments to policyholders, gauging the financial soundness of insurance companies, was estimated to remain at 14.3 percent as of end-2011.

The figure showed the extent to which its soundness had deteriorated as its earlier figure came to 52.6 percent when the FSS instructed the firm to draw out a plan to avoid insolvency last September.

Should the figure fall further, financial authorities could choose to halt the operations of Green Non-Life.

Business suspension could also be linked to delisting from the Korea Exchange.

A Korea Exchange official said the possible delisting depends on the regulatory decision as to whether to halt operations.

In addition, market observers cast anxiety over the possibility that about 850,000 policyholders of Green Non-Life could be harmed.

But FSS officials continue to downplay the feasibility of business suspension or delisting.

“Even under a worst-case scenario, policyholders can be compensated according to laws on protection of depositors.”

Last Wednesday, the Securities and Futures Commission, a decision-making panel of the FSS, said that the insurance firm was suspected of frequently rigging stocks between July 2010 and September 2011.

During the period, the insurance firm engaged in more than 3,000 cases of fraudulent trading, according to the regulator.

The SFC alleged that the practices were aimed at raising the “risk-based capital,” a regulatory requirement for the insurance sector.

Affiliates of Green Non-Life Insurance and the company’s subcontractors are also suspected of involvement in the practices, the SFC said.

In addition to the company and Lee, the SFC requested that the prosecution investigate seven more figures.

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