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Bloomberg
Samsung Group’s biotechnology unit is facing a potential criminal investigation and delisting after South Korea’s financial regulator said that the company “intentionally†violated accounting rules surrounding an initial public offering.
A securities panel of South Korea’s Financial Services Commission said Samsung Biologics Co. deliberately overstated the value of affiliate Samsung Bioepis ahead of its IPO in 2016, which raised about $2 billion. The regulator fined Samsung Biologics $7 million and recommended the company dismiss its CEO.
FSC Vice Chairman Kim Yong-beom said in briefing that it would ask prosecutors to launch a criminal
investigation into the accounting violations while stock trading of Samsung Biologics will be halted. The company will also be under review for delisting. Kim said no companies have been delisted on accounting issues in South Korea so far.
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The scandal is the latest involving a Samsung Group unit, after Lee Jae-yong, vice chairman of Samsung Electronics Co., was jailed for bribery and released earlier this year. The case threatens to be another potential black eye for the country’s biggest chaebol and may resurrect calls for better corporate governance.
Samsung Biologics, in an email statement, expressed regret over the financial regulator’s ruling, saying it was confident that the company didn’t violate accounting standards. Samsung Biologics said it will file an administrative lawsuit against the decision.
“I don’t think this issue will end in the short term,” said Park Sung-shin, fund manager at KTB Asset Management in Seoul. “The issue will be sent to prosecutors, and there is uncertainty whether it will have an impact on the succession issue of Samsung Group.”