UK - Hermes Investment Management has rejected an indictment issued by the Korean prosecutor accusing the asset manager of unfairly profiting to the sum of Won7.3bn (e6.2m / £4.2m / $7.5m) following comments made to the press by former fund manager Robert Clements.
A spokesman for Hermes confirmed the prosecutor had sought to fine the company $7.5m (e6.2m) and also issued a warrant for Clements’ arrest.
Clements is accused of manipulating the share price of Samsung Corporation by giving an interview to the Korean press in November 2004, which allegedly implied that Samsung may be taken over, and that Hermes would support any takeover attempt.
According to Hermes’ lawyer, the company is accused of then selling all its shares to earn the Won 7.3bn profit.
The spokesman maintained Clements had in fact been “substantially, materially and fundamentally mis-quoted” during a telephone conversation with a translator, who had then relayed the conversation to a Korean journalist for an article subsequently printed in a Korean-language newspaper on 1 December 2004.
“Hermes and the prosecutor have got the transcripts of these conversations and it is absolutely apparent that it is not what the man said,” he explained.
The Korean Prosecutor has now passed his findings to a judge to opine on the matter and Richard Bernays, chairman of Hermes , said proceedings were likely to start within a matter of weeks.
Bernays added that Hermes were still in discussions with their lawyers to decide whether it would be commercially viable to fight the case.
“There’s a downside in many ways to fighting these things, not only the diversion of management time associated,” he said. “We’ll be talking to our lawyers to see whether they continue to advise us, as they do, that we have done nothing contrary to Korean securities law. Even though I am sure that we are innocent there is a commercial position to be taken.”
The Hermes spokesman said the warrant for Clements had been issued because he declined to travel to Korea for interview.
“If at the end of this process Hermes are found guilty, they just pay a fine, if he [Clements] is found guilty, it’s a prison sentence,” he said.
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