The nation’s leading civic group on Tuesday filed a complaint with the prosecution against 25 executives of LG Cable on suspicion of illegal insider trading.
The 25 individuals of the LG family, including Koo Cha-yol, vice chairman of LG Cable, sold more than three million shares of LG Card before the credit card affiliate fell into severe financial trouble in November.
The People’s Solidarity for Participatory Democracy (PSPD) insisted that the LG Group families could have avoided great losses as they sold off LG Card stocks after accessing insider information on the card unit’s financial health.
The LG family dumped a 2.64 percent stake, or 3,147,189 shares, in LG Card, from Nov. 7 to Nov. 21, while the credit card company suspended its cash advance services on Nov. 21 due to cash flow problem.
“LG Card crisis hit the financial market at the end of November but the 25 individuals evaded losses totaling 3.8 billion won thanks to the stock selling,” PSPD official Kim Sang-jo said.
The stock price of LG Card dropped from 13,900 won on Nov. 7 to 5,880 won on Nov. 27., and it closed at 600 won last Monday.
LG Cable spokesman Jang Young-ho said, “The sale was inevitable as we are making gradual steps to be spun off from the LG Group since 2002.”
The trading was legal as the 25 individuals sold all of their 15 percent stake in LG Card over the past two years on a step by step basis, Jang said. “They were supposed to sell all the shares by December 2003 when LG Cable became independent from the parent group.”
Last week, unionized workers of LG Investment & Securities asked the Financial Supervisory Service (FSS) to investigate LG Group chairman Koo Bon-moo and the group’s 94 executives, including the 25 individuals, for the questionable stock trading.
Kim Boong-lak, head of the labor union, said a number of individual investors and employees at LG Investment and LG Card sustained great losses due to the dubious insider trading.