Investigators from the Southern Seoul District Prosecutors’ Office carried out search and seizure operations at six corporate offices and five private residences, including those of Korea Zinc executives and branches of Mirae Asset Securities and KB Securities.
Authorities confiscated computers, internal communications, approval records, and other documents as they examine whether the company breached capital market laws in the lead-up to its 2.5 trillion won (approximately $1.75 billion) rights issue announced in October 2024.
The probe follows a referral by the Financial Supervisory Service in January, after questions surfaced over Korea Zinc’s disclosure practices during the period of a share buyback program conducted between October 4 and 23 of last year. During that time, the company publicly stated it had “no plans to make changes to its financial structure following the buyback.”
However, prosecutors are now scrutinizing whether Korea Zinc’s board had already been engaged in planning the rights issue — potentially misleading the market.
According to local media reports, Mirae Asset Securities, the lead underwriter, commenced due diligence for the offering on Oct. 14, well before the official announcement on Nov. 6.
Regulators later ordered Korea Zinc to amend its securities filings, saying the disclosures could have misled investors. The company ultimately withdrew its rights offering plan on Nov. 13, only a week after it was made public.
At the center of the investigation is whether Korea Zinc sought to manipulate the market by repurchasing and canceling shares, then planning to issue new ones — a tactic that could constitute illegal market manipulation.
The raid is the first major prosecutorial action against Korea Zinc since a high-profile management dispute erupted last year, when private equity firm MBK Partners allied with Young Poong Group in a hostile takeover attempt. That battle has since escalated into a series of legal entanglements.
reporter
Kim Dong-young
davekim0807@ajupress.com
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