FSC meets with FSS to decide on BioLogics

Korea’s top financial regulator held a meeting on Thursday to determine whether Samsung BioLogics misleadingly inflated its value with an accounting trick before going public in 2016 with the aim of making a final decision on the case.

But the outcome of the meeting was not announced as of press time.

The meeting led by the Financial Services Commission (FSC) is part of efforts to resolve an ongoing controversy that pits Samsung’s bio unit against the Financial Supervisory Service (FSS) over the financial watchdog’s ruling that BioLogics violated accounting rules ahead of its 2016 initial public offering. The Samsung affiliate denies the allegation.

The review session is the third after a second discussion on May 25 failed to reach a conclusion.

Members of the FSC and FSS gathered at the Friday proceeding, a departure from the previous meeting in which the head of BioLogics was also invited to make the company’s case.

“Since we have heard the stance by Samsung BioLogics, the regulators will have an in-depth discussion with each other this time around,” a source at the Financial Services Commission said.

Media reports said the FSC intends to come to a conclusion Friday and take its decision to a securities and futures commission meeting next month for final approval.

The commission’s meeting, due to be held on June 7, could either accept or overturn the decision.

The dispute centers on the drug maker’s motivations in changing the status of Samsung Bioepis from subsidiary to affiliate in 2015. The valuation of BioLogics surged after the shift.

BioLogics defended its move, saying that the change was to prepare for a potential situation in which Biogen, a U.S. biotech company that jointly invested in Bioepis, could use its call option to raise its stake in Bioepis.

The FSS believes that the U.S. company refrained from using the call option in 2015 and that the change in Bioepis’ relation with BioLogics was purely intended to inflate its value.

The dispute over BioLogics’ accounting practice affected the company’s stock price after the controversial preliminary ruling came out on May 1.

Its market cap stood at 32.3 trillion won ($29.9 billion) on April 30 but shrank to 28.8 trillion won as of May 31.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]