In early trading on the 27th, SK Securities fell 7%. The drop is seen as stemming from news that SK Securities arranged a 150 billion won loan for O Chang-seok, the Oner of Mugunghwa Trust, and has struggled to recover the funds.
As of 9:34 a.m. on the same day, SK Securities was trading at 671 won on the Korea Exchange, down 52 won (7.45%) from the previous session.
Earlier, in June 2023, SK Securities arranged a 150 billion won loan for Chair O, using Mugunghwa Trust shares as collateral, and directly executed 86.9 billion won. It then structured the loan with the management equity (50%+1 share) of Mugunghwa Trust held by O as collateral and resold 44 billion won to institutional and retail clients.
However, as the real estate market froze rapidly, an event of default (EOD) occurred five months after the loan. Because unlisted shares are difficult to liquidate in the market, forced selling was impossible and the recovery of the claim was delayed. As a result, some investors did not recover principal, and SK Securities paid 13.2 billion won, equal to 30% of the affected customers' investments, as an advance payment.
The market has raised criticism that SK Securities' internal controls were weak. SK Securities originally restricted loans secured by unlisted shares under its internal rules, but in 2019 it changed the rules to allow them "when reviewed and approved by the executive committee." Loans secured by Mugunghwa Trust shares then began and expanded over several years. In 2021, the amount increased to 115 billion won, ostensibly for repayment of existing borrowing fund and payment of interest.
Mugunghwa Trust has effectively remained in default even after the loan matured. SK Securities is seeking recovery through a sale of management control, but no buyer has reportedly emerged.
However, SK Securities issued a statement the same day, saying, "The three loans made to Mugunghwa Trust were lawful procedures in compliance with laws and internal rules," and emphasized that "they were carried out under normal risk management based on sound financial conditions and external evaluations."