A South Korean court has suspended the first sanctions that the Securities and Futures Commission (SFC) under the Financial Services Commission (FSC) imposed on Samsung BioLogics Co. for a failure to disclose important information. Previously, the company obtained a court injunction to suspend the SFC’s second sanctions. Accordingly, Samsung BioLogics is heaving a sigh of relief.
The Seoul Administrative Court accepted on Feb. 19 Samsung BioLogics’ request for an injunction to suspend the SFC’s first sanctions imposed on the company in July last year. The court accepted the company’s claim that it would suffer irreversible damage if the SFC’s sanctions are implemented. With the court’s latest decision, Samsung BioLogics will be able to avoid the SFC’s first and second sanctions until the court makes its final ruling in a lawsuit filed by Samsung to nullify the SFC’s penalties.
In July, the SFC told Samsung BioLogics to fire its executive in charge of accounting and be audited by a designated external auditor for three years for its failure to disclose the call options it granted to U.S.-based bio firm Biogen, a partner in establishing Samsung Bioepis.
Samsung BioLogics filed an administrative suit to have these penalties canceled. It also requested a court order to put on hold the execution of the penalties until the final verdict comes out.
The SFC released the conclusion of its second investigation in November last year, saying that the company intentionally committed accounting fraud at the end of 2015 by changing the status of Samsung Bioepis from a subsidiary to an affiliate. It announced additional sanctions, including the dismissal of the company’s CEO and other executives who were involved in the alleged fraud, restating of its financial statements, and imposition of an 8 billion won (US$7.09 million) fine.
Samsung BioLogics filed an administrative lawsuit with the Seoul Administrative Court to nullify the commission’s second sanctions and obtain an injunction to suspend any disciplinary action until the court rules on the case. In January this year, the court accepted Samsung BioLogics’ request for an injunction to halt the execution of SFC’s second penalties.