Prudential ordered to pay 20 billion won for unfair share sales

By Kim Eun-jung
SEOUL, Jan. 29 (Yonhap) -- The Supreme Court upheld Thursday a lower court's
ruling that ordered Prudential Investment & Security Co. and an audit company to
pay 20 billion won (US$17.3 million) to investors for unfair share sales,
concluding an eight year legal battle, court officials said on Friday.
In 2002, a total of 1,483 investors had filed suit against Hyundai Investment &
Securities and Samil PwC Advisory, which conducted an audit of its shares,
seeking compensation for financial damage they suffered in the process of
purchasing new shares in 2000.
Prudential acquired Hyundai in 2004.
Hyundai sold shares worth 525 billion won to its clients and employees to
increase its capital after it suffered financial losses on the collapse of Daewoo
Group, once South Korea's second-largest conglomerate. Daewoo went bankrupt in
1999 under the weight of US$80 billion in debt in the wake of the Asian financial
crisis.
Over 23,000 investors participated in the shares offer for public subscription
with the investment reaching 260 billion won, but less than 10 percent of them
joined the collective suit against the securities firm. Now the remaining
investors cannot file a lawsuit against Prudential because the time period they
can legally ask for compensation has already passed.
"Employees at security firms should provide critical information about securities
and stock companies so that their clients can make sound judgments and decisions
on their possible investment," the top court said in a ruling.
"If a company obstructs clients from making a reasonable decision by providing a
conclusive judgment on the price changes, groundless claim or exaggeration, it
should take responsibility for the illegal activities," the court said.
The total amount of compensation accounts for about 20 billion won, with interest
accumulated in the last eight years.
ejkim@yna.co.kr
(END)