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Regulators suspend trading of Samsung BioLogics on accounting fraud charges

Lee Han-soo  Published 2018.11.14  18:28  Updated 2018.11.15 15:13

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The Korean Exchange suspended the share trading of Samsung BioLogics on Wednesday after the Securities and Futures Commission (SFC) ruled that the company intentionally breached accounting rules in 2015 ahead of its initial public offering.

With the ruling, the Korea Exchange will review the company for potential delisting from the country’s main KOSPI bourse. According to government regulations, the process can take up to a month.

"We concluded that Samsung BioLogics violated accounting standards intentionally in 2015 to secure legitimacy in changing its controlling status over its affiliate Samsung Bioepis,” SFC Chairman Kim Yong-beom said. "The company’s decision to exaggerate Samsung Bioepis' corporate value should be withdrawn as it did not go through proper channels.”

The ruling by the SFC is likely to deal a massive blow to Samsung BioLogics, which had vehemently denied allegations of accounting breach.

In May, the financial authorities gave prior notice to Samsung BioLogics that it broke accounting rules in 2015. The regulatory probe centers on questions concerning the biopharmaceutical company’s sudden profits that year after recording losses for years. Samsung Biologics reported a net profit of 1.9 trillion won ($1.72 billion) in 2015 after changing the method used to calculate the value of Samsung Bioepis.

The SFC plans to tell the company to dismiss responsible executives and an 8 billion won fine. It also intends to file a complaint with the prosecutor against the company.

Despite the ruling, the company said it would file a suit to prove the legality of its actions.

“We are still confident that Samsung BioLogics has not breached any accounting rules,” the company said in a statement. “We will try to prove the legality of accounting by filing administrative lawsuits.”

corea022@docdocdoc.co.kr

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