A court in South Korea Friday found the local head of a US-based private equity firm Lone Star guilty of financial manipulation and sentenced him to five years in jail, according to dpa. In addition to the prison sentence for Lone Star's Korean unit head, Paul Yoo, the Seoul court fined the firm 25 billion won (27 million dollars). The court held Yoo responsible for manipulating the stock market in the merger of the company with Korea Exchange Bank (KEB) in 2003. KEB was also fined 25 billion won for altering its books to allow a sale under the market value. Based in the US state of Texas (the so-called "lone star" state), Lone Star denies the charges. The company bought a majority stake (50.5 per cent) in KEB in 2003 for 1.5 billion dollars, and the legal issue is holding up a deal to sell the KEB share to British bank HSBC for 6.3 billion dollars. The Financial Oversight Commission in Seoul on Friday said it will postpone its approval of the HSBC transaction as long as it takes to clear up questions over the legality of the 2003 KEB acquisition by Lone Star.