KB News Desk
The Financial Supervisory Service, South Korea’s financial watchdog, decided to recommend disciplinary actions against private equity giant MBK Partners on Thursday, reportedly including a suspension from duties.
The sanction will be finalized through approval by the Financial Services Commission.
The FSS did not disclose the level of the recommended sanction on the day. But sources familiar with the matter say the watchdog decided to maintain its previous recommendation to suspend MBK Partners from duty over the handling of its portfolio company Homeplus.
MBK Partners has been accused of amending the terms of the redemption rights for the redeemable convertible preferred shares in favor of Homeplus around the time of its credit rating downgrade, potentially undermining the interests of investors.
Under the Capital Markets Act, sanctions against a general partner escalate in the following order: institutional caution, institutional warning, suspension from duty for up to six months and dismissal recommendation.
A suspension of duties is considered equivalent to a business suspension for asset managers and would potentially prohibit the firm from accepting new capital commitments.
The FSC, Korea’s top policymaking body for financial regulation, will finalize the level of the sanction through further deliberation.
MBK Partners said it will continue to present its case in future proceedings, stressing the changes to the terms of Homeplus’ RCPS were not illegal.
“We have thoroughly explained that the issues raised so far, in particular the changes to the terms of Homeplus’ RCPS, were a reasonable investment decision intended to improve its financial structure and preserve corporate valuation, thereby protecting investor interests,” a statement issued by MBK Partners showed.
“We will continue to faithfully present the case through future legal procedures,” it added.
