The Seoul Southern District Prosecutor's Office recently raided the headquarters of Nature Cell, a biotech company, over stock price manipulation allegations, according to local reports.
The prosecution is likely to investigate Ra Jeong-chan, the CEO of Nature Cell, for using the false and exaggerated information to manipulate the market.
This is the second time that Ra faces similar allegations. In 2015, Ra was found guilty of garnering billions of won by using undisclosed company information while serving as the CEO of RnL Bio in 2013 and received a suspended jail sentence.
According to Money Today, a local media outlet, the prosecutors received information on Nature Cells through the Fast Track system, which is a system that allows the exchange to turn over information to the prosecutors directly.
The Korea Exchange, the Financial Supervisory Service, and the Financial Services Commission investigate suspected share price manipulation cases before handing them over to the law enforcement authorities.
In the case of Nature Cell, the stock exchange reported that it had found abnormal circumstances from November last year, when the company’s stock prices rose sharply, to March, when the stock prices plummeted.
The drastic fall in the company’s share price came after Jointstem, a stem cell therapy developed by the company for degenerative arthritis, failed to obtain conditional approval. The treatment is an autologous adipose-derived mesenchymal stem cell injection.
During that time, the Ministry of Food and Drug Safety’s central pharmaceutical affairs council rejected Nature Cell’s application as its study had too few specimens, and MRI scans showed that 53.85 percent of patients, treated with Jointstem, experienced a progression of the disease.
After the news of the raid, the company’s stocks plummeted again to 19,600 won ($18) around 2 p.m., a 30 percent decrease from the previous trading day.
Nature Cell issued a strong statement of repudiation. “The Biostar Group, including Nature Cell, has never acted against any law,” the company said. “We have never tried to manipulate Nature Cell’s share prices as suggested by some media outlets.”
The company went on to say, “Nature Cell believes that such temporary happening cannot cover the truth of our honest management style.”