South Korean prosecutors have dropped charges against US hedge fund Elliott Management Corp. suspected of violating its duty to report a stake increase in Samsung C&T Corp. prior to its 2015 merger with another Samsung unit, prosecution officials said Monday.

The Seoul Southern District Prosecutors' Office decided not to indict the company because its probe has found no grounds to bring charges, they said. 

South Korea's financial regulator filed a complaint in early 2016 seeking a probe into Elliott on suspicions that it belatedly disclosed in a regulatory filing that its stake in Samsung C&T had risen to 7.12 percent from 4.95 percent.

Under local capital market law, stakeholders with a 5 percent stake or more must make the change in stock ownership public through a regulatory filing within five days of the change in the stock holding.

Elliott notified of the stake increase within two days, but the financial regulator suspected that it knowingly withheld the information even though it was already expecting the stake increase from a total return swap (TRS) deal it had clinched weeks before. (Yonhap)