Two German financial firms ordered to pay for market manipulation

A South Korean district court on Thursday ordered two German financial institutions to compensate for the losses it caused a local bank after it manipulated the South Korean stock market in 2010 in an incident known here as the "Nov. 11 Options Shock."

The Seoul Central District Court sided with KB Kookmin Bank in a civil lawsuit filed against Deutsche Bank and Deutsche Securities, demanding that the German financial institutions pay 718.5 million won (US$624,600) to the South Korean bank.

Deutsche Bank and Deutsche Securities sold 2.44 trillion won worth of local stocks just 10 minutes before the market closed on Nov. 11, 2010, leading the KOSPI 200 Index to plummet nearly five points to 247.51. If the incident hadn't occurred, the KOSPI 200 Index should have ended at 252.55 points, the court said.

KB Kookmin Bank claimed it suffered about 718.5 million won from the incident.

The court rejected the German firms' claims that the traders should have been aware of the risks involved.

"The market manipulation done by the defendants could not be predicted," the court said.

Meanwhile, the court only partially sided with two small investors who had filed similar lawsuits against the German companies. They were ordered to pay 1.2 billion won and 300 million won to each investor, respectively.

Deutsche Securities is presumed to have pocketed about 44.9 billion won from the incident.

Three Deutsche Securities employees at the firm's Hong Kong branch face charges of market manipulation in South Korea, but have yet to appear at the South Korean court. (Yonhap)