By Park Hyong-ki
Staff Reporter
Shares of Human & Technology (H&T) continued their downward spiral on news that nearly 1,000 minority shareholders filed a lawsuit for damages against its major shareholder and the company over stock price manipulation.
This is by far the biggest class-action suit by investors against a company.
H&T is a small-sized enterprise that mainly produces computer components for hard disk drives, and Samsung Electronics is its only client. The major shareholder of the tech-venture firm is Jeong Kuk-kyo, an incumbent proportional lawmaker from the United Democratic Party.
According to the Hannuri law firm, some 660 retail investors filed a lawsuit against Jeong and his firm H&T, claiming that they lost 32.6 billion won as the owner manipulated its stock price through false disclosures for personal profit.
``Jeong has committed stock fraud through false public statements on the company homepage and in its regulatory filing as well as interviews with the press,'' said Kim Joo-young, a lawyer for Hannuri, representing the 660.
He added that his scheme of gaining profit by raising the stock price through false claims has hurt hundreds of investors involved in H&T.
In addition to Hannuri, some 260 investors have filed a lawsuit against Jeong through the Hankyul law firm, claiming damages of 11 billion won. About 50 more are expected to take legal action as well. This comes as prosecutors indicted Jeong with detention for insider trading last May.
Last year, Jeong rigorously publicized that his company will engage in solar energy development projects in Uzbekistan, and that H&T will sign a memorandum of understanding with its government.
This news shot up its stock price, reaching near 90,000 won in October 2007 from around 3,000 won in February, and Jeong gained a profit of over 40 billion won by selling his shares.
But its shares quickly plummeted after H&T announced in November that the energy deal was dropped, deeply hurting retail investors when the price tumbled back to 3,000 won.
Hannuri said the tech firm saw its market cap skyrocket, ranking second among Kosdaq-listed entities at one point during Jeong's false publicity stunts.
``Court proceedings are likely to take place in the latter half,'' said Kim.
H&T was established in 2000 by a group of workers from Taeil Precision after it went bankrupt. The tech-venture backed by Jeong went public on the tech-heavy Kosdaq in 2006.
H&T posted a net loss of 3.7 billion won in the first quarter of this year, on sales of 7.5 billion won, down 79 percent a year earlier, due to declining orders from Samsung Electronics. Its shares closed down 1.64 percent at 2,990 won Friday.
Previously, the biggest class-action lawsuit by investors against companies included Hyundai Electronics and Sejong Hi-Tech in the early 2000s. But each lawsuit only claimed compensation of less than 10 billion won.
During the period, SK faced an internal brawl with the global fund Sovereign Asset Management, then its biggest shareholder, as the fund attempted to oust chairman Chey Tae-won over the group's accounting fraud and insider trading.
phk@koreatimes.co.kr