Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Legal battle over Kiwoom Securities' report begins
By Kim Bo-eun
Kiwoom Securities' building in Yeouido, Seoul / Korea Times file
By Kim Bo-eun
A legal battle has begun between investors of Soulbrain, a manufacturer of hydrogen fluoride, and Kiwoom Securities which issued a report on the company.
A group of 30 investors filed a compensation suit against the securities firm with the Seoul Southern District Court, Aug. 9, claiming the report on Soulbrain was misleading.
The price of Soulbrain's shares shot up in early July as the company gained attention for possibly being able to substitute for Japan's exports of hydrogen fluoride, which came under new restrictions.
However, on July 19, Kiwoom issued a report that Soulbrain's share prices were inflated as it would not be a beneficiary of Japan's export restrictions on hydrogen fluoride.
The report claimed “Because the company deals with liquid hydrogen fluoride, it does not have much to do with gaseous hydrogen fluoride, for which export has been restricted.”
The report downgraded expectations for Soulbrain to “underperform,” which is usually considered a sign to sell shares.
Soulbrain requested the report to be revised, and Kiwoom added more words of explanation to its report.
The addition explained that local substitution for liquid hydrogen fluoride is already underway and that there was greater need to find a substitute for gas hydrogen fluoride, for which Korea has greater dependency from overseas suppliers.
"We just added a few more sentences to the report, and this did not change its tone," a Kiwoom Securities spokeswoman said.
Park Shin-ho, who is representing the shareholders, said the report appeared to state that liquid hydrogen fluoride is not subject to Japan's export restrictions, while it is.
He said the report also did not contain a statement that Kiwoom was not responsible for investors' decisions.
The Kiwoom official acknowledged this.
“The statement was omitted in the report,” she said.
In addition, Park said Kiwoom failed to notify investors of revisions made to the report.
Regarding the matter, the Kiwoom official said, “The changes made to the report were not revisions, but additional clarification.”
Meanwhile, Park is also leading another criminal suit against Kiwoom on allegations that it violated regulations on the capital market. The suit was filed on Aug. 1.
“One investor is estimated to have lost up to 23 million won from selling Soulbrain shares after seeing the report,” Park said.