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BioLogics gets helpful ruling from high court

Oct 17,2019
The Supreme Court affirmed a lower court decision suspending administrative measures against Samsung BioLogics for alleged fraud.

With the top court having ruled on the disciplinary measures meted out by the Securities and Futures Commission (SFC), Samsung BioLogics is free until the court reaches a decision on suspected accounting fraud.

The biopharmaceutical company, which is 43.44 percent owned by Samsung C&T and 31.49 percent by Samsung Electronics, announced Wednesday that the Supreme Court ruled on Oct. 11 to affirm a lower court ruling to have SFC’s first disciplinary measure remain suspended until the trial on suspected accounting fraud is finished.

Samsung BioLogics has been under investigation for violating accounting rules to inflate the value of its Samsung Bioepis subsidiary ahead of a 2016 initial public offering of BioLogics.

The SFC has said accounting irregularities could have totaled approximately 4.5 trillion won ($3.79 billion). With that number as the basis, the regulator in July reported the company and its CEO to the prosecution.

Samsung BioLogics responded by asking for the administrative order to be suspended until the final ruling. After a series of court proceedings, the Supreme Court made a final ruling last week to have the disciplinary action remain suspended, affirming the lower court’s ruling made in May.

The Seoul High Court then ruled that the disciplinary action could negatively impact Samsung BioLogics even before charges against the company are confirmed and that the administrative order would damage the company, its partners and investors.

The SFC took a second disciplinary action against Samsung BioLogics soon after the first by imposing an 8 billion won fine, demanding the company to fire its CEO and requiring the firm to correct its balance sheet.

Samsung BioLogics responded with an appeal to the administrative order, and the Supreme Court ruled in September this year that the second disciplinary action must remain suspended until Samsung BioLogics receives a final ruling.

As both disciplinary actions have been put on hold, Samsung BioLogics said it is now in shape to better concentrate on fighting its case in court.

The company is currently engaged in a court battle at the Seoul Central District Court after prosecutors charged eight of its former and current employees of destroying evidence in relation to the suspected accounting fraud.

Officials found a server and laptops when raiding the company’s factory in Songdo, Incheon.

Since the launch of the probe, prosecutors raided the Samsung BioLogics headquarters in December last year and the Korea Exchange in March this year.

The prosecution also raided the offices of the National Pension Service Investment Management last month to secure evidence on its possible collusion with the company.

With the news of disciplinary action being suspended, shares of Samsung BioLogics rose 3.99 percent to 339,000 won Wednesday.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]


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