Tongyang chairman sentenced to 15 years in prison

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Tongyang chairman sentenced to 15 years in prison

Hyun Jae-hyun, chairman of Tongyang Group, was sentenced to 15 years imprisonment, a local court announced yesterday, on charges of issuing soured bonds and commercial paper to investors last year.

The Seoul Central District Court said Hyun, the group’s top decision maker, harmed about 40,000 retail investors with his actions when the group’s affiliates were about to go bankrupt.

“Tongyang abused its ownership of the securities business and sold financial products without properly explaining them to retail investors, who are the most vulnerable group in the financial sector,” the prosecutors said. “Through unfair transactions with the group’s subsidiaries, the owner’s family reaped private interest.”

Last year, Tongyang Securities and Tongyang Group were accused of selling high-risk bonds to individual investors who were not told that some affiliates were close to bankruptcy. The five affiliates collapsed and filed for court receivership soon after the bonds were sold.

From July to September 2013, the group issued a total of 157 billion won ($153 million) worth of asset-based commercial paper to investors through Tongyang Securities, using shares of Tongyang Cement & Energy as collateral.

Tongyang Inc., Tongyang Leisure, Tongyang International, Tongyang Cement and Energy and Tongyang Networks filed for bankruptcy protection on Sept. 30 and Oct. 1 after they failed to pay back maturing short-term debts worth some 110 billion won.

The chairman was also accused of committing 665 billion won worth of accounting fraud through the group’s subsidiaries. He also manipulated the stock price of the group’s cement company and reaped about 40 billion won worth of profit, according to the prosecutors.

The former presidents of Tongyang Securities and Tongyang Cement were sentenced to 10 years and eight years imprisonment, respectively. Tongyang Networks’ former president was also sentenced to eight years in prison.

BY song su-hyun []

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