Samsung BioLogics may sue FSS for accounting fraud accusation, stock dn 17%

2018.05.02 13:48:28 | 2018.05.02 15:58:34

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Samsung BioLogics shares nosedived nearly 20 percent Wednesday to a three-month low upon news that it could face punitive action from South Korean authorities for breaking accounting rules.

The Financial Supervisory Service (FSS) said on Tuesday it had given a preliminary notice to the contract manufacturer of biologic drugs and its auditors Samjeong and Anjin after completing special probe.

The FSS said its year-long special investigation led to the conclusion that the company had breached accounting rules, accusing it and auditors of inflating corporate value of Samsung Bioepis ahead of initial public offering in late 2016.

Samsung BioLogics on Wednesday strongly denied the allegations, saying it would prove its books were sound. During an emergency press meeting, Samsung BioLogics indicated of taking an administrative lawsuit against the FSS decision as it claimed accounting practice followed discussion with outside experts and did not take any illegal profits from the accounting process.

Shares of Samsung Biologics ended Wednesday 17.2 percent at 404,000 won.

The investigation began after a local activist group questioned the integrity of the company’s financial statements in 2015, when Samsung BioLogics reported a 1.9 trillion won ($1.76 billion) net profit after net losses for four consecutive years from 2011. The abrupt makeover was boosted by Samsung Bioepis whose value was revalued at 5 trillion won. Samsung BioLogics said it conducted corporate valuation based on market value instead of acquisition value, but the activist group argued such a change had violated accounting rules.

By Jin Young-tae and Minu Kim

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