Watchdog to probe CJ’s suspected stock price rigging overseas

The Financial Supervisory Service started a probe if CJ Group manipulated its stock price by serving as so-called "dark-haired foreigners" in connection with the conglomerate’s suspected amassment of overseas slush funds.”

According to the financial authority on Sunday, the Financial Supervisory Service started probe into suspicions that CJ Group owners including Chairman Lee Jay-hyun pocketed profit by trading stocks of its affiliates through overseas brokerage accounts in borrowed names. The financial watchdog is also launching an investigation into CJ Group`s stock price manipulation through mass purchase of its own stocks by establishing offshore funds overseas. The Korea Exchange classifies as foreign investments if transactions are conducted through overseas affiliates of domestic securities companies even if investors are Koreans.

“The key issue of the probe is whether (they) acted as if they were foreigners,” a ranking official at the Financial Supervisory Service said. “We are probing share price trends of CJ Group affiliates, their public disclosures, changes of foreign stakes in the firms in the past.” Analysts say that considering the characteristic of the Korean stock market, which tends to be highly sensitive to the trends of foreign investors’ trading, if Lee and others conducted transactions by disguising themselves as foreigners, they would have netted huge sums of profit.