By Ju-min Park and Liana B. Baker
SEOUL/LOS ANGELES (Reuters) - South Korean prosecutors are looking into U.S. activist fund Elliott Management to see whether it violated disclosure rules, local media reported on Wednesday, a claim the hedge fund said was leaked to the press after it began a legal dispute with South Korea over a controversial 2015 merger of two Samsung (KS:005930) affiliates.
Yonhap News Agency said the investigation was in relation to Elliott's 2015 purchase of shares in Samsung C&T Corp (KS:028260), citing prosecutors.
Elliott said in a statement that it was concerned "details of a confidential and long-dormant investigation were suddenly leaked to the press just hours after Elliott confirmed that it is seeking compensation relating to the unlawful intervention by the former administration and the National Pension Service in the merger of Samsung C&T and Cheil Industries."
The U.S. fund has said it was seeking to negotiate with South Korea regarding compensation for its damages from the merger. It has begun a legal dispute with the South Korean government over the 2015 tie-up, a South Korean government official said on Tuesday.
Elliott has challenged the country's top two family-run conglomerates, most recently Hyundai Motor Group, over better corporate governance and returns to shareholders.
In 2015, the activist fund took on Samsung, South Korea's largest family-run conglomerate. It narrowly failed to block an $8 billion merger between Samsung C&T and Cheil Industries, which it argued was unfair.
The deal later became the center of a corruption scandal that led to the arrests of former President Park Geun-hye and the heir to the Samsung empire, Jay Y. Lee last year.
Elliott held about 7 percent of shares in Samsung C&T at the time.
Yonhap added that South Korean prosecutors had notified the fund's officials of a plan to interview them, but cited a prosecution official as saying it might be difficult to question them as they are outside South Korea.
The Seoul prosecutors' office did not answer calls from Reuters outside regular business hours.
Elliott added in a statement that "Elliott used swaps lawfully and in a manner consistent with Korean law," and that South Korea's Financial Supervisory Service chose not to file any enforcement action.
