The Financial Supervisory Service said Tuesday that it launched a full-fledged investigation on possibly speculative stock investors exploiting shares of Tong Yang Group units.
“The regulatory probe focuses mostly on irregular fluctuation in the stock prices of the cash-strapped group’s listed units,” an FSS official said. “There could be manipulation attempts amid the woes involving a liquidity crisis in the conglomerate.”
After three Tong Yang units filed for court receivership on Monday, two more firms ― Tong Yang Networks and Tong Yang Cement ― followed suit the next day, which is expected to accelerate the share trading of the remaining Tong Yang affiliates.
The FSS said that it decided to strengthen the watch after detecting an unusual surge of net selling and buying among the shareholders.
Rumors surrounding the nation’s 38th-largest conglomerate’s financial plight quickly spread around the Chuseok holiday week, which led to hyper-trading of shares of Tong Yang affiliates.
The number of traded shares of Tong Yang Cement, for instance, rose 51-fold to about 8.8 million shares in just seven days, between Sept. 17 and Sept. 24.
The number of Tong Yang Inc. stocks traded soared 18.4-fold during the same period.
The regulator vowed to launch an in-depth investigation on the Tong Yang affiliates, should it sense substantially suspicious moves in the stock trading.
About chances of stock manipulators’ involvement on the abnormal flow, the regulator said it would take into account all possibilities although there is no immediate evidence of illegal trading.
The volatile trading may also have been triggered by fearful noncorporate investors seeking to sell off their shares, experts said.
On Monday, Tong Yang Inc., Tong Yang Leisure and Tong Yang International applied for court receivership upon failing to repay more than 100 billion won ($90.9 million) worth of commercial paper and corporate bonds.
By Chung Joo-won