FSS probes Warburg Pincus over LG Card shares

South Korea’s Financial Supervisory Service (FSS) are probing US Equity firm, Warburg Pincus, over suspicions of insider trading over shares in LG Card.

Warburg Pincus had originally held a 20% share in LG Card until October 2003, when it sold most of it’s main shareholding. Shortly afterwards, LG Card was pushed close to banruptcy after a consumer spending bubble burst.

At the time of sale, Hwang Sung-jin was leading Warburg Pincus’s Korean investments and also an outside director of LG Card.

Although Warburg Pincus deny wrongdoing, the FSS is investigating suggestions of insider trading.

This case follows a series of high-profile deals that have seen Western-backed investment groups making massive profits off the back of sales of Korean interests.

However, since private equity funds from foreign investors became a mainstay of the Korean corporate scene after economic crisis in 1997, some investors have suggested the current FSS investigation may be as much for political posturing, rather than any real evidence of manipulation of stock markets.