South Korean prosecutors raided Homeplus’ headquarters on Monday as part of an investigation into alleged fraud by the company’s executives. A group of prosecutors and investigators were dispatched to Homeplus’ main office in Gangseo District, Seoul, to conduct a search and seizure operation.

The raid also included the headquarters of Homeplus’ major shareholder MBK Partners. Authorities suspect that Homeplus and MBK were aware in advance of a downgrade in the company’s credit rating and were preparing for corporate rehabilitation but continued to issue short-term bonds. Prosecutors are investigating company executives on charges including fraud.

Homeplus’ credit rating was downgraded from A3 to A3- in February 2025, and the company filed for court receivership just four days later on March 4th. Prosecutors are focusing on the fact that even after Homeplus and MBK received a downgrade notification from a credit rating agency on February 25th, 2025, they issued over 80 billion won ($54.47 million) in bonds to attract investors. Issuing new bonds when a credit downgrade and rehabilitation proceedings were imminent is viewed as being potentially deceptive toward investors.

Prosecutors are also investigating possible mis-selling by Shin Young Securities, which led the sale of asset-backed short-term bonds based on Homeplus’ credit card receivables. If it is found that sufficient risk disclosures were not provided to investors during the sales process, the firm could face liability for incomplete sales. Several securities companies filed criminal complaints against Homeplus executives for fraud earlier this month.

Meanwhile, the Financial Supervisory Service officially referred the Homeplus case to prosecutors on April 21st, 2025, following its investigation. The financial regulator reportedly found indications that MBK may have been aware of the likelihood of a credit rating downgrade much earlier than it had claimed. Internal documents suggest that Homeplus faced severe liquidity issues from late 2023 and discussions about entering rehabilitation proceedings had already started among the company’s executives around that time.

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