The Securities and Futures Commission (SFC), the top decision-making board of South Korea’s Financial Services Commission, on Wednesday found intentionality behind Samsung BioLogics Co.’s breach of accounting rules in 2015 and pressed criminal charges against the management, a move that would immediately suspend the heavyweight bio stock from trading on the main Seoul bourse.

“Given the circumstantial and documental evidence, we concluded that Samsung BioLogics arbitrarily interpreted and bent accounting rules to build legitimacy in the management change in 2015,” said Kim Yong-beom, vice chairman of the FSC, on Wednesday.

Intentionality has been the key to pressing with punitive actions on the accounting wrongdoing. The commission did not find any intentionality behind questionable accounting reports in 2012 and 2013.

Upon the finding, the financial authority will refer the case to the prosecution, order dismissal of the CEO, and levy fines. A criminal action automatically suspends the stock from trading while the stock exchange operator reviews the case separately for 20 days to determine whether to expel the stock. Delisting due to accounting fraud charges has been rare. Moreover, the move won’t be easy given the lofty share retailers have in the up-and-coming contract drug maker Samsung Group is grooming heavily as its new growth.

Shares of Samsung BioLogics closed Wednesday 6.7 percent up at 334,500 won ($294.45) before the release of the review results.

The stock this week has been on a rollercoaster ride ahead of the results amid fears about negative finding and possible delisting. It nosedived 22 percent on Monday, but recovered by 10 percent on Tuesday as panicky selling subsided.

Samsung BioLogics issued an immediate statement, denying any wrongdoing and apologizing to investors and customers for the controversy, but vowed to take administrative legal actions against authorities to clear its name. A court battle between the government and Samsung BioLogics could take years.

Samsung BioLogics is suspected of deliberately inflating its net profit in 2015 ahead of going public. The value of Samsung Bioepis, a biosimilar joint venture with U.S. drug maker Biogen, jumped 18 times after accounting changes and Samsung BioLogics suddenly swung to a net profit after years of losses ahead of the initial public offering.

Auditors would be fined and suspended. Samsung BioLogics was fined 8 billion won.

Kim Tae-han, chief executive of Samsung BioLogics, would face prosecutorial questioning.

By Jin Young-tae and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]