Prosecutors said Thursday they are investigating allegations that an American hedge fund manipulated the stock trading system in the country to obtain illegal capital gains.
HanMag Securities Co., a small securities firm, was declared bankrupt in February after a numerical error in its options trading in December 2013 cost it 46 billion won ($41 million) and its business license.
In November, HanMag sued Cassia Capital Partners Ltd., claiming it unjustly pocketed about 35.4 billion won from the mistake.
The American firm is accused of having illegally installed its algorithm trading program on a server that only connects South Korean firms with the local bourse operator.
HanMag says the program may have placed multiple orders in succession to buy HanMag’s options below market value and further manipulated their prices.
Prosecutors at the Seoul Southern District Prosecutors’ Office said they are investigating whether Cassia Capital’s trading broke any laws. (Yonhap)
