Former Lone Star Korea head appeals prison sentence

A former head of Lone Star Funds' Korean unit has challenged an appeals court's prison sentence for his manipulation of stock prices of a credit card firm, the court said Wednesday. Yoo Hoe-won, 61, filed the appeal with the Supreme Court on Monday through a law firm that he hired for the case, according to the Seoul High Court. The court sentenced him to three years in prison last week for deliberately releasing a stock market rumor in 2003 that the credit card unit of Korea Exchange Bank (KEB) planned to write off some of its capital and issue new shares, news that caused the share prices of the card company to drop. The rumor helped Yoo's firm take over the credit card firm for a below-market price and merge it with KEB, which was under control of Lone Star. The Texas, U.S.-based buyout fund was also fined 25 billion won (US$21.3 million) for the stock market manipulation scheme. It has yet to appeal the decision. A final ruling from the Supreme Court of Korea on Yoo's case is expected to put an end to the long-running court battle. After being indicted in 2007, Yoo was first sentenced to five years behind bars by a local district court, but the Seoul High Court overturned the decision and acquitted Yoo of stock manipulation charges. But the Supreme Court dismissed the lower court's not-guilty decision and sent the case back for a retrial earlier in 2011. The high court then handed down the three-year prison sentence last week. Yoo's filing of an appeal comes as Lone Star is trying to sell KEB to local banking group Hana Financial Group Inc. Hana Financial agreed to take over Lone Star's 51.02 percent stake in KEB last November, but the deal was put on hold as the financial regulator withheld its regulatory approval, citing the court battle. If Lone Star decides not to appeal its court ruling, the financial regulator becomes able to force Lone Star to unload part of its KEB shares, holding the fund to be a legally inappropriate major shareholder for a local financial firm. Meanwhile, prosecutors said Wednesday that they also appealed to the top court against the lower court's not-guilty verdict on KEB in regard of the stock market manipulation scheme. In the same ruling last week, the court acquitted KEB of suspicion of joining with the U.S. fund and Yoo in the market manipulation that breached the Securities and Exchange Law.