Debate over Samsung BioLogics delisting heats up

By Lee Kyung-min

The Korea Exchange (KRX) will soon initiate a delisting review of Samsung BioLogics whose stocks remain suspended from transaction. The Financial Services Commission (FSC) ruled on Nov. 14 that the firm intentionally cooked its books in 2015.

“The Listing Maintenance Review (LMR) commission will convene a meeting this week when the schedules of the committee members are fully coordinated,” a KRX official said.

“It might take a while since they are all non-standing members. Once the meeting is convened, the outcome of the deliberation may be delivered before the end of the day or they may set a second meeting for further deliberation.”

The commission will conduct a 20-day review of the scandal-ridden biopharmaceutical arm of Samsung Group over whether it should be delisted, have its stock trading resumed or be given a grace period until further review.

The LMR comprised of one KRX official and six outside experts including lawyers and professors will review whether the firm meets requirements in criteria such as transparency, continuity and protection of interest of both the public and investors.

The review comes amid continued public debate over whether the firm should be delisted.

Market participants and experts are split over the issue.

Opponents claim that the decision should be made taking into consideration the protection of many individual investors and far-reaching impact on the entire market.

They said a “less shocking” punishment (than delisting) should be pursued given most of the individual investors bought the stocks based on the values of the profitable firm with a sustainable business model that would earn them handsome returns.

“Delisting is too extreme a measure. A hefty fine will send the right message. Also to be considered are many small stakeholders who will have to bear the brunt if the stocks they bought becomes worthless,” an unnamed private think tank researcher told Yonhap News Agency.

In contrast, proponents say that delisting is a must to help ensure trust in the stable operation of the Korean bourse.

“Accounting fraud is a grave crime which severely undermines the fundamental principle of fair and transparent operation of the stock trade,” a petitioner wrote on the Cheong Wa Dae website.

“The review will serve as a barometer for whether Korea is truly governed by the rule of law and principle, or by underhanded influence of the powerful conglomerate.”

The petitioner said the impending decision must look to a similar case involving electricity generation and natural gas company Enron's former CEO Jeffrey Skilling, who was sentenced to 24 years in prison and $45 million fine (50 billion won) in 2006 for having cooked company books to inflate profits.

He was convicted of 19 out of 28 criminal counts of securities fraud, insider trading, making false statements to auditors, insider trading and conspiracy.