Samsung C&T Attack Elliott Cleared of Reporting Obligation Violation Charges

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[Asia Economy Reporter Lee Jung-yoon] The prosecution has concluded no charges against hedge fund Elliott Management, which was accused of secretly holding a large stake in Samsung C&T during its merger with Cheil Industries.

The Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office announced on the 29th that it had decided not to indict Elliott for violations of the large shareholding reporting obligations.

A prosecution official stated, "The investigation found no evidence to acknowledge the alleged charges, leading to a decision of non-prosecution."

In February 2016, financial authorities judged that Elliott's covert increase of its stake through the use of total return swaps (TRS), a derivative financial product, during its accumulation of Samsung C&T shares in 2015 violated the '5% rule' and reported this to the prosecution. The Capital Markets Act stipulates the 5% rule, which requires shareholders holding more than 5% of shares to disclose their holdings within five days.

Elliott disclosed holding 4.95% of Samsung C&T shares on June 2, 2015, and then announced holding 7.12% on June 4. However, financial authorities argued that Elliott had already contracted to receive TRS shares from securities firms at the time of the first disclosure, thus violating the 5% rule.

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