[비즈한국] There is growing sentiment that financial authorities are closely monitoring MBK Partners, the private equity firm at the center of the controversy surrounding Homeplus's application for corporate rehabilitation. A consensus has formed that this presents an opportunity to address the adverse effects on companies when profit-maximizing private equity firms become their largest shareholders.
In fact, financial authorities are expected to refer the management of Homeplus and its major shareholder, MBK Partners, to the prosecution this week on charges of fraudulent unfair trading. The case will be handled via the Securities and Futures Commission's emergency fast-track procedure, as authorities reportedly captured evidence that Homeplus issued short-term bonds while preparing for corporate rehabilitation. Given that prosecutors dispatched to the financial authorities are deeply involved in the fast-track decision-making process to coordinate communication, there is speculation that the prosecution could conduct raids as early as this week or next.
Strong Commitment from Financial Authorities
According to financial authorities, the Financial Services Commission (FSC) plans to notify the prosecution of the fraudulent trading allegations against Homeplus and MBK Partners' leadership via the fast-track procedure early this week. A regular meeting of the Securities and Futures Commission is scheduled for the 23rd, and the case is highly likely to be transferred to the prosecution around that time.
MBK Partners claims it began preparing for corporate rehabilitation on February 28, the date Homeplus's credit rating was downgraded. However, financial authorities have been investigating the firm under the suspicion that this may be false. It is reported that they have uncovered evidence of discussions and communications regarding the potential for a downward trend prior to the credit rating downgrade.
Specifically, financial authorities believe that issuing short-term bonds while concealing preparations for corporate rehabilitation constitutes fraudulent unfair trading. The total volume of sales—including Homeplus corporate paper (CP), short-term bonds, and asset-backed short-term bonds (ABSTB) based on credit card receivables—reached 589.9 billion won as of the 3rd of last month. On the 25th of last month, just before the credit rating downgrade, 82 billion won in ABSTBs were issued in a single day.
Financial debt is frozen once a company enters corporate rehabilitation; therefore, issuing bonds while aware of this is treated as an act of deceiving bond investors. It is known that the financial authorities will refer MBK Partners Chairman Kim Byung-ju, MBK Vice Chairman and Homeplus co-CEO Kim Kwang-il, and Homeplus CEO Cho Joo-yeon to the prosecution as subjects of investigation.
Financial authorities appear to have a strong will to use the MBK Partners case as an opportunity to establish guidelines for private equity funds. Their plan is to continue uncovering issues at MBK Partners through inspections and audits even after the relevant materials are handed over to the prosecution. The Financial Supervisory Service (FSS) has expanded its inspection beyond MBK Partners to include its advisory arm, Special Situations (SS), and has converted its accounting review of Homeplus into a compulsory audit, citing potential violations of accounting standards.
Similar Pace to SM Entertainment Case
It is predicted that the prosecution may also initiate compulsory investigations (such as raids) on MBK Partners as early as this week or next.
This outlook is reinforced by the fact that the pace of this investigation is similar to that of the SM Entertainment stock manipulation case. Although the battle for control of SM was resolved in February-March 2023 through negotiations between Kakao035720 and HYBE352820, the FSS referred the case to the prosecution (Seoul Southern District Prosecutors' Office) via the fast-track procedure just one month after launching its investigation into unfair trading. The prosecution subsequently raided the SM Entertainment headquarters on April 18.
A lawyer who previously worked for financial authorities explained, "One of the duties of prosecutors dispatched to the FSS and the FSC is to coordinate opinions between the prosecution and financial regulators. The fact that a referral has been decided means that the suspicions are sufficiently proven for the prosecution to begin an investigation, so it is highly likely the prosecution will act swiftly."
The fact that MBK Chairman Kim Byung-ju was absent from the National Assembly's emergency hearing on March 18, citing an overseas business trip, is another factor increasing the likelihood of a rapid prosecution investigation. A partner at a large law firm noted, "The 'arrogant' stance maintained by MBK compared to typical companies may be viewed unfavorably by financial authorities and the prosecution," adding, "However, as it is unlikely the prosecution's investigation will conclude before the early presidential election on June 3, the guidelines provided to the prosecution and financial authorities by the next government could be a variable."